USDJPY trades with modest losses, despite the USD weakness. US bond yields that are declining give some support to the USD bulls and keep them on the defensive.

USDJPY moves downward for the second straight day, but there is little action.

For the second straight day, the USDJPY duo is under some selling pressure. This is increasing its distance from the YTD high, which was reached last week around the 137.10 area.

Moreover, the duo bounces back just a few pips from the daily low and trades in the early European period. Just over mid-135.00s, down about 0.20 percentage points on the day.

USDJPY impacted by US. Treasury – Yields.

The yields on US Treasury bonds end up being a major driver pushing the cross weaker. In addition, the impending threat of a recession appears to favor the Japanese Yen. A safe haven currency, and promote and is offering the tone covering the major.

After China announced a lower-than-anticipated goal for economic growth and predicted that the economy would expand by 5 percent in 2023. Concerns about a bigger worldwide recession reemerged.

Kazuo Ueda favors an ultra-loose policy

Given the differing monetary policy outlooks of the Federal Reserve and the Bank of Japan. The downside for the USDJPY combination appears mitigated.

The governor of the Bank of Japan, recently stated, that the central bank is still not looking to quickly end a decade of huge relief. He emphasized the importance of maintaining the ultra-loose policy to support the fragile economy.

In contrast, everyone anticipates that the US central bank will maintain its hardline stance. And likely to raise rates, for a longer period of time to control rampant inflation.

The inbound US macro figures pointed to an economy that is resilient. Despite rising borrowing costs and showed that inflation isn’t decreasing as quickly as anticipated.

March US FOMC is the main key for USDJPY traders

Additionally, at the March policy meeting, a number of FOMC members supported the argument for further rate increases. Support for a 50 basis point lift-off.

The US bond yields should benefit from this, which will support USD supporters’ expectations for the emergence of dip-buying

Before this week’s major events and data risks, beginning with Fed Chair Jerome Powell’s semi-annual congressional testimony on Tue and Wed. Traders may also prefer to stay away from the market.

Investors will be on the lookout for new cues regarding the Fed’s path toward future rate hikes. That will have a significant impact on how the USD price moves in the short term.

BOJ Monetary Policy

The BoJ’s monetary policy meeting on Friday and the public release of the tightly looked at. The US monthly job report, commonly referred to as the NFP, will come after this.

The BoJ targets a range of +/- 0.50 percent around zero for Japanese Government Bonds (JGBs). From, which 10 years and has a policy rate of -0.10 percent.

The BoJ targets a range of +/- 0.50 percent around zero for Japanese Government Bonds (JGBs). From, which 10 years and has a policy interest rate of -0.10%.  The 10-year JGB has been trading consistently close to its upper limit of 0.50 percent.

Major Technical Levels