Receding safe-haven demand undermined the Japanese yen and assisted the USD/JPY pair to stage a goodish rebound from the 114.80-114.75 region, or a two-week low touched earlier this Friday. The US Secretary of State Antony Blinken agreed to a meeting with Russian Foreign Minister Sergei Lavrov late next week and raised hopes for a diplomatic solution to the Ukraine crisis. This, in turn, led to a recovery in the global risk sentiment and drove investors away from traditional safe-haven assets.

That said, fears of an imminent Russian invasion of Ukraine held back bulls from placing aggressive bets. In fact, UK Prime Minister Boris Johnson and US President Joe Biden accused Russia of fabricating a pretext to invade Ukraine. It is worth recalling that Russian media reported on Thursday that rebels in eastern Ukraine accused government forces of shelling their territory. This should keep a lid on the optimistic move in the markets and the USD/JPY pair amid subdued US dollar demand.

The USD/JPY is retreating from daily highs, but the 50-day moving average (DMA) at 114.77 stopped the fall. Nevertheless, the pair is upward biased, but downside risks remain. The outcome of a daily close under the 50-DMA could send the USD/JPY tumbling towards February 2 low at 114.14.

Otherwise, the path of least resistance is upwards. The USD/JPY first resistance would be February 16 daily low at 115.35, previous support-turned-resistance. Breach of the latter would expose February 15 daily high at 115.86, followed by a challenge of the YTD high at 116.35.

USDJPY Will Survive With Gains Above 114.40 Price

Feb 19 2022