USDJPY fell for the second straight day On account of resurgent safe-haven demand.

On Wednesday, the USDJPY pair begins to trend lower for a second straight day as it draws some sellers in the 130.60 region. The pair keeps its present tone going into the North American session and is trading close to the daily low, between 129.75 and 129.70. The Japanese Yen receives a minor boost from a number of reasons, which is perceived as placing some downward pressure on the USDJPY pair.

Investor mood is negatively affected by the possibility of a recession, which causes some haven flows to go toward the JPYUSD.

Market players seem persuaded that strong inflation may encourage a more hawkish approach from the central bank later this year, notwithstanding the Bank of Japan’s (BoJ) dovish decision last week. In addition, a new wave of the global risk-aversion trade favors the JPY’s position as a relative safe haven. Despite the rising threats of a recession, the market’s morale is still weak by concerns about the economic repercussions of the longest-running Russia-Ukraine war and the worst-ever COVID-19 epidemic in China. In addition, the World Bank’s most recent research highlighted that the world economy is currently experiencing its worst decline after a post-recession recovery since 1970. In turn, this is seen to be depressing investor confidence and causing some haven movement to the JPY.

A slight increase in the demand for USD might provide support and assist the major’s downside be limited (USDJPY).

 Meanwhile, the worldwide flight to safety helps the US Dollar gain some momentum and pull away from a nine-month low. This could provide some support for the USDJPY pair and prevent further declines. In addition, traders could hold off on making risky bets before this week’s significant US macro announcements, which might have an impact on the Fed’s cycle of rate hikes. This will increase demand for USD. and give the major a brand-new directional thrust.

While waiting for any pertinent macroeconomic data from the US, traders will instead be watching the overall market risk sentiment and USD price dynamics to seize any short-term chances surrounding the USDJPY pair. However, recent price movement and the underlying environment imply that the present negative trend may still be far from being ended. Any effort at a recovery move may thus be sold into and, for the time being, be restricted.