Topic: Daily Market Analysis by Forex92
USD/JPY drifts lower to the 115.20 region as attention remains focused on the Russia-Ukraine conflict.
After failing to profit from the overnight strong intraday recovery of roughly 130 pips from the 114.40 area, or the three-week low, the pair ran out of gas on Friday. The drop is mainly due to the US dollar's continued decline from its greatest level since June 2020, triggered by Russia's invasion of Ukraine on Thursday.
Despite recent geopolitical developments, the US dollar's status as the global reserve currency has been weakened. This, in turn, weighed on the USD/JPY, however the impact of the Putin-Zelenskyy meeting on a possible ceasefire looks muted.
Dmitry Peskov, Putin's press secretary, said Putin is willing to meet with Ukrainian President Volodymyr Zelenskyy provided he agrees to compromise on Russia's red lines. Moreover, reports claimed that Russian troops had halted most advances. This may weaken the Japanese yen and strengthen the USD/JPY.
Nonetheless, the potential of a new flare-up in the Russia-West Ukraine war should keep investors on edge. The USD/JPY pair should be approached with caution due to the mixed fundamental background. So the market will keep an eye on new developments in the Russia-Ukraine conflict.
The market now awaits the release of the Fed's favourite inflation gauge, the core PCE Price Index, and Durable Goods Orders. The statistics will likely be overshadowed by geopolitics and have little impact on USD price dynamics or the USD/JPY pair.