USDJPY recovers from an intraday low to recoup recent losses amid a three-day decline.
As markets prepare for the US Q1 GDP report on Thursday, the USDJPY picks up bids to consolidate recent losses around the mid-133.00s. The cautious optimism around the increase of the US debt ceiling. And the Bank of Japan (BoJ) officials’ defense of the existing ultra-easy monetary policy might add weight to the corrective recovery.
Following the adoption of the “Limit, Save, Grow Act. A White House official stated that President Joe Biden has stated unequivocally that this measure has no chance of becoming law. The same thing calls into question the bill’s initial optimism. Amid predictions of a lengthy and arduous debate on the main issue. Reuters reported that the US House of Representatives barely cleared a package to raise the nation’s $31.4 trillion debt cap on Wednesday. Defying President Joe Biden by tying significant spending cutbacks over the next decade.
Officials at the Bank of Japan continue to favor lose money policies, putting off the need to change the YCC.
Former BoJ Deputy Governor Masazumi Wakatabe recently stated that he would be shocked if the BoJ changed Yield Curve Control (YCC) on Friday. Previously. Bank of Japan (BoJ) Governor Kazuo Ueda stated before the Japanese Parliament. Known as the Diet, that the danger of a rise in inflation caused by a loss of market faith in Japan’s finances is minimal for the time being. The policymaker also attempted to dampen speculation of inflation difficulties. Implying that there will be no change in this week’s monetary policy meeting, not even around the YCC.
The US House of Representatives voted legislation to kick-start debt ceiling talks.
In addition, conflicting US data and equities market performance are weighing on the USDJPY pair. As US Durable Goods Orders climbed. However, the Consumer Confidence details eased. Furthermore, the tech titans helped the Nasdaq to remain higher. But the rising anxieties from First Republic Bank (FRB) due to another 20% share price drop on Wednesday. Following a 50% drop the day before weigh on morale.
Against this context, US Treasury bond rates are unchanged. While the S&P 500 Futures are up 0.20% at 4,083 by press time, following a mixed close on Wall Street.
Market concerns over First Republic Bank’s performance may impact on the Yen pair ahead of the US Q1 GDP report.
Looking forward, USDJPY traders should keep an eye on the risk triggers, including the banks and the US debt ceiling, while waiting for the US first quarter (Q1) GDP, which is predicted to fall to 2.0% on an annualized basis from 2.6% before.
USDJPY Technical Analysis
A combination of the prior support line from early April and a one-week-old resistance line, both around 134.15, limit the USDJPY pair’s short-term recovery. However, negative swings remain elusive beyond a one-month-old rising trend line near 132.65.
