USD/JPY tracks corrective bounce in yields to aim for 134.00 ahead of US inflation data


  • USD/JPY picks up bids to rebound from one-month low, snaps three-day downtrend.
  • Markets consolidate SVB-led moves amid mixed concerns surrounding Fed.
  • US two-year Treasury bond yields pare the biggest daily loss since October 1987.
  • Receding fears of US financial crisis contagion, optimism for China recovery also favor Yen buyers.

USD/JPY clings to mild gains around 133.70 as it snaps a three-day downtrend with a bounce off the one-month low marked the previous day. In doing so, the Yen pair cheers the market’s consolidation of the moves induced by the US actions to tame fears emanating from the Silicon Valley Bank (SVB) and the Signature Bank. Adding strength to the quote’s rebound could be the recent recovery in the US Treasury bond yields after the previous day’s bond market havoc.

That said, the US 10-year Treasury bond yields seesaw around 3.56%, after bouncing off the monthly bottom of 3.418%, whereas the two-year counterpart rebounds from the lowest levels since September 2022 to print mild gains of around 4.05% by the press time. It should be noted that the US two-year Treasury bond yields dropped the most since 1987 the previous day while the latest rebound could be a U-turn from the 200-DMA support ahead of important US data.

It should be noted that the traders witnessed heavy bond buying the previous day as the US banking regulators rushed to defend the Silicon Valley Bank (SVB) and the Signature Bank after their fallouts. US banking regulators undertook joint actions to tame the risks emanating from SVB and Signature Bank during the weekend.  While announcing the plan, US President Joe Biden noted on Monday that investors in those banks will not be protected and reminded that "no one is above the law." However, the US President also vowed to take whatever action was needed to ensure the safety of the US banking system, per Reuters.

However, the policymakers from the UK and Europe, as well as some of the Asia-Pacific majors, have ruled out the odds of witnessing a financial crisis at home after the SVB saga, which in turn might have also pleased the USD/JPY buyers of late.

Alternatively, receding hawkish Fed bets and downbeat US inflation expectations join the market’s jittery status amid the US-China tensions and SVB talks seem to challenge the USD/JPY buyers.

Also read: US inflation expectations drop to five-week low ahead of CPI release

Above all, the Yen pair traders seem to position themselves for the US CPI. However, major attention should be given to the risk catalysts and the yields. That said, the US CPI is likely to ease to 6.0% YoY versus 6.4% prior while CPI ex Food & Energy may slide to 5.5% YoY from 5.6% prior.

Also read: US Inflation Preview: Five scenarios for trading the Core CPI whipsaw within the SVB storm

Technical analysis

Although the 50-DMA restricts immediate downside of the USD/JPY pair around 132.50, the recovery moves remain elusive unless staying below the previous support line from early February, around 136.20 by the press time.

Additional important levels

Overview
Today last price 133.76
Today Daily Change 0.56
Today Daily Change % 0.42%
Today daily open 133.2
 
Trends
Daily SMA20 135.3
Daily SMA50 132.46
Daily SMA100 135.83
Daily SMA200 137.49
 
Levels
Previous Daily High 135.05
Previous Daily Low 132.29
Previous Weekly High 137.91
Previous Weekly Low 134.12
Previous Monthly High 136.92
Previous Monthly Low 128.08
Daily Fibonacci 38.2% 133.34
Daily Fibonacci 61.8% 133.99
Daily Pivot Point S1 131.97
Daily Pivot Point S2 130.75
Daily Pivot Point S3 129.21
Daily Pivot Point R1 134.74
Daily Pivot Point R2 136.28
Daily Pivot Point R3 137.5

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays in daily range slightly below 1.0900

EUR/USD stays in daily range slightly below 1.0900

EUR/USD continues to move up and down in a narrow band slightly below 1.0900 in the second half of the day on Monday. The modest improvement seen in risk mood makes it difficult for the US Dollar to find demand and helps the pair stay in range.

EUR/USD News

GBP/USD treads water above 1.2900 amid risk recovery

GBP/USD treads water above 1.2900 amid risk recovery

GBP/USD is keeping its range play intact above 1.2900 in the American session on Monday. The positive shift seen in risk sentiment doesn't allow the US Dollar to gather strength and helps the pair hold its ground ahead of this week's key data releases.

GBP/USD News

Gold drops to fresh 10-day low below $2,390

Gold drops to fresh 10-day low below $2,390

Gold stays under persistent bearish pressure after breaking below the key $2,400 level and trades at its lowest level in over a week below $2,390. In the absence of fundamental drivers, technical developments seem to be causing XAU/USD to stretch lower.

Gold News

Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews

Crypto Today: Bitcoin is less than 10% away from all-time high as Ethereum ETF approval anticipation brews

Bitcoin trades around $68,000 early on Monday, less than 10% away from its all-time high of $73,777 on Binance. Ethereum ETF anticipation brews among traders and Ether investment products see inflow of over $45 million in the past week. 

Read more

Election volatility and tech earnings take centre stage

Election volatility and tech earnings take centre stage

The US Dollar managed to end the week higher as Trump Trades ensued. Safe-havens CHF and JPY were also higher while activity currencies such as NOK and NZD underperformed.

Read more

Forex MAJORS

Cryptocurrencies

Signatures