USD/JPY remains depressed below 134.00, hangs near daily low amid modest USD weakness – by hareshmenghani USDJPY Recession BOJ Fed Currencies
34.35 area touched the previous day. The pair remains on the defensive through the first half of the European session and is currently placed around the 133.80 region, just a few pips above the daily low.
The US Dollar retreats from a six-week high amid a modest downtick in the US Treasury bond yields and turns out to be a key factor dragging the USD/JPY pair lower. The Japanese Yen , on the other hand, is underpinned by speculations that the Bank of Japan governor candidate Kazuo Ueda will dismantle the yield curve control. Apart from this, looming recession risks further benefit the JPY's relative safe-haven status and weighs on the major.
The downside for the USD/JPY pair, however, seems cushioned amid the prospects for further policy tightening by the, which should act as a tailwind for the US bond yields and the Greenback. In fact, the markets are now pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May. The bets were reaffirmed by the recent US macro data, which pointed to stubbornly high inflation and a resilient economy, despite rising borrowing costs.
The aforementioned fundamental backdrop seems tilted in favour of the USD bulls and supports prospects for the emergence of some dip-buying around the USD/JPY pair. Even from a technical perspective, this week's sustained breakout through the 133.00 hurdle adds credence to the positive bias and suggests that the path of least resistance for spot prices is to the upside. Hence, the intraday corrective pullback is more likely to remain limited.
. Apart from this, the broader risk sentiment should allow investors to grab short-term trading opportunities around the major.
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