USD/JPY: Mildly offered below 129.00 as yields seesaw near post Fed lows, BoJ talks praise YCC move

USD/JPY prints three-day losing streak despite recent bounce off weekly low.
BoJ’s Wakatabe appears determined to tame inflation, praises YCC move.
US 10-year Treasury bond yields dribble around two-week low.
Second-tier US data, other central bank announcements can please Yen bears before Friday’s US NFP

Anil Panchal FXStreet

USD/JPY pares intraday losses around 128.60 during the three-day downtrend as the market slips into consolidation mode ahead of the second round of central bank dossier amid early Thursday.

The Yen pair dropped to its lowest levels in two weeks earlier in the day while extending the Federal Reserve (Fed) induced losses amid downbeat Treasury bond yields. That said, the US 10-year Treasury yields slumped the most in two weeks while testing the lowest levels in a fortnight the previous day after the US Federal Reserve (Fed) announced its dovish hike of 0.25%. The US central bank unveiled receding fears of inflation and Chairman Jerome Powell showed readiness for cutting the rates if inflation drops faster, which in turn drowned the US Dollar and yields. The same propelled the risk-on mood and favored Wall Street bulls.

On the other hand, hawkish comments from Bank of Japan (BoJ) officials also favored the GBP/JPY bears. That said, Bank of Japan's Deputy Governor Masazumi Wakatabe has said the BoJ will continue to conduct monetary policy to achieve 2% inflation accompanied by wage growth. The Japanese central bank has recently conducted multiple bond market moves to defend the Yields Curve Control (YCC) policy. BoJ’s Wakatabe was recently heard praising the YCC move of the BoJ.

It should be noted, however, that the comments from BoJ’s Wakatabe also ruled out the market’s fears of any immediate move, which in turn allowed USD/JPY to lick the Fed-inflicted wounds.

Amid these plays, the S&P 500 Futures print mild gains while Japan’s Nikkei 225 follows the suit as traders await another round of central bank announcements, this time from the European Central Bank (ECB) and the Bank of England (BoE).

In addition to the central bank news, US Factory Orders for December, expected 2.3% versus -1.8% prior, and the US Preliminary Nonfarm Productivity for the fourth quarter (Q4), expected 2.4% versus 0.8% prior. Above all, Friday’s US jobs report for January will be crucial to follow for clear directions.

Technical analysis

The successful downside break of the 13-day-old ascending trend line, around 129.40 by the press time, directs USD/JPY bears towards the previous monthly low of near 127.20.

USD/JPY

Overview
Today last price	128.6
Today Daily Change	-0.23
Today Daily Change %	-0.18
Today daily open	128.83

Trends
Daily SMA20	130.14
Daily SMA50	133.17
Daily SMA100	139.05
Daily SMA200	136.79

Levels
Previous Daily High	130.41
Previous Daily Low	128.54
Previous Weekly High	131.12
Previous Weekly Low	129.02
Previous Monthly High	134.78
Previous Monthly Low	127.22
Daily Fibonacci 38.2%	129.25
Daily Fibonacci 61.8%	129.7
Daily Pivot Point S1	128.11
Daily Pivot Point S2	127.39
Daily Pivot Point S3	126.24
Daily Pivot Point R1	129.98
Daily Pivot Point R2	131.13
Daily Pivot Point R3	131.85

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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