USD/JPY traces softer yields to slid beneath 131.00, US President Biden’s SOTU eyed

USD/JPY extends the previous day’s bearish momentum with a slower pace.
US Treasury bond yields ease amid mixed news, unimpressive Fed talks and Japan trade numbers.
Market sentiment remains sluggish as traders await US President Biden’s SOTU.

Anil Panchal FXStreet

USD/JPY stays pressured around 130.90 while extending the previous day’s pullback from the highest level in a month. In doing so, the Yen pair tracks the recent weakness in the US Treasury bond yields amid the sluggish start of Wednesday’s Tokyo trading. It’s worth noting that mixed Japan data and Fedspeak joins geopolitical concerns to weigh on the quote of late.

US 10-year Treasury bond yields snap a three-day uptrend while retreating from a one-month high of around 3.68% to 3.67% by the press time. The same weigh on the US Dollar Index (DXY), down for the second consecutive day to near 103.30 at the latest. That said, the S&P 500 Futures print mild losses to track Wall Street and portray downbeat sentiment.

Japan’s trade deficit eased to ¥-1,225.6B versus ¥-1,814.6B expected and ¥-1,537.8B prior but the Current Account balance softened to ¥33.4B from ¥1,803.6B previous readings and ¥98.4B.

Elsewhere, Minneapolis Federal Reserve (Fed) President Neel Kashkari told CNN, "We may have to hold rates at a higher level for longer," while adding that he is not forecasting a recession. Following that, Federal Reserve Chairman Jerome Powell said, “Expect 2023 to be a year of significant declines in inflation,” while also adding that if data were to continue to come in stronger than expected, would certainly raise rates more.

It should be noted that optimism surrounding the Japanese government’s wage talks to labor representatives, during March, seems to have favored the optimism at home. However, China’s rejection of the Pentagon's request keeps the geopolitical tension high.

Looking forward, USD/JPY pair traders should rely on the Bank of Japan (BoJ) talks to aim for further downside, especially amid recent hawkish concerns surrounding the Japanese central bank. Also important to watch will be today’s State of the Union (SOTU) speech from United States President Joe Biden. “US President Joe Biden will face Republicans who question his legitimacy and a public concerned about the country's direction in Tuesday's State of the Union speech that is expected to serve as a blueprint for a 2024 re-election bid,” said Reuters ahead of the event.

Technical analysis

A U-turn from the 50-DMA, around 132.40 at the latest, directs USD/JPY towards the 130.00 round figure.

Additional important levels

Overview
Today last price	130.89
Today Daily Change	-0.20
Today Daily Change %	-0.15%
Today daily open	131.09

Trends
Daily SMA20	129.84
Daily SMA50	132.53
Daily SMA100	138.55
Daily SMA200	136.8

Levels
Previous Daily High	132.71
Previous Daily Low	130.48
Previous Weekly High	131.2
Previous Weekly Low	128.08
Previous Monthly High	134.78
Previous Monthly Low	127.22
Daily Fibonacci 38.2%	131.33
Daily Fibonacci 61.8%	131.86
Daily Pivot Point S1	130.14
Daily Pivot Point S2	129.19
Daily Pivot Point S3	127.9
Daily Pivot Point R1	132.38
Daily Pivot Point R2	133.66
Daily Pivot Point R3	134.61

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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