The USDJPY currency pair fell back after Tuesday had tried to recover higher. During the early Asian session this Wednesday (29/7) the Japanese Yen was again able to dominate the movement. In the end, the pair was able to be dragged towards the 105.00 exchange rate. 

One of the main factors supporting the Japanese Yen is a very heavy risk to recovery. Because the previous optimism was indeed blown from the news of fiscal stimulus hopes from US policymakers. Unfortunately, there is currently no progress whatsoever from the stimulus talk. 

Thus burdening the US Dollar and canceling its recovery efforts from the lowest point. The Coronavirus problem, however, also contributed to the drop in USDJPY. Given no significant development so far. Pressure for the US Dollar also came from the Fed's prediction that will dovish at a meeting later in the morning. 

Therefore, tonight's meeting will certainly greatly influence the dynamics of the US Dollar going forward. Aside from fiscal stimulus and pandemic problems, many problems support the Japanese Yen to dominate the recent movement and bring the USDJPY down. 

Together with the global risk-off tone, a barometer of risk sentiment that is the yield on US Treasury bonds in 10 years remained down at 0.58%. Asian stocks such as Japan's Nikkei also posted a decline due to risk-off to 0.50%.

USD JPY Movement had Experienced Bullish

The further movement of the USDJPY pair will be strongly influenced by the dynamics of risk sentiment. Then the market speculation action ahead of the Fed meeting later tonight will also move the pair. For the closest, comments that will be delivered by the BoJ might move the pair in the short term. 

That comment will provide clarity about the BoJ's steps during a crisis due to a pandemic. During the initial Asian session this Tuesday (28/7), the USDJPY currency pair was bullish after recovering from its latest lows. 

In the last few hours, the US Dollar has been able to lift the currency pair towards a daily peak of around 105,500. Previously USDJPY managed to find a strong support point around the round number 105.00 and put it to good use along with the recovery of the US Dollar. 

So that the bullish USDJPY stops the bearish momentum that has happened in the last few days. Even the bearishness has dragged the pair towards the valley 4.5 months ago. It was reported that policymakers from the US were making progress faster by approving the latest fiscal stimulus. 

Then all of that brought US Treasury bond yields soaring and also impacted the recovery of the US Dollar. Unfortunately, hopes of a dovish Fed meeting tomorrow Wednesday may limit USDJPY bullish.

USD JPY Increase is Constrained by Conflict

At the moment market players and global investors are still very worried about the Coronavirus pandemic which has not improved at all. The pandemic of the second attack was feared to make economic recovery efforts in shambles.

Then comes speculation that predicts that the Fed will provide even more stimulus. Today's USDJPY rise is also severely limited by conflicts between the US and China. The presence of US air forces in the South China Sea threatens relations and could get hotter. 

This supports the Japanese Yen to regain strength due to risk aversion. Market participants and investors may continue to wait for the next direction of USDJPY. Considering there is no catalyst as a prime mover other than the Fed meeting tomorrow Wednesday. 

But data on consumer confidence may offer movement and opportunities in the short term for tonight's session. The pair's previous recovery departed from 106.68 and buying momentum could not last long. Moreover, Asian market catalysts appear to be very mixed so they are more supportive of caution and bring USDJPY bearish again.