The USD/JPY pair has seen a mild positive bias, trading just above the mid-149.00s, as it rebounds from a three-day decline. While a modest bounce in US bond yields has contributed to the revival of USD demand, cautious sentiment among bullish traders prevails due to the lack of strong follow-through buying. The pair has stalled its corrective decline from its recent high in October 2022.
Rebounding US Treasury bond yields have supported the USD Index (DXY), recovering from a six-week low following the release of US jobs data. Additionally, the Bank of Japan's dovish stance and the current risk-on environment have weakened the Japanese Yen (JPY), providing tailwinds for USD/JPY. The BoJ's minor shift in its yield curve control policy hints at a gradual departure from accommodative monetary policy.
The divergence in monetary policy between the Bank of Japan (BoJ) and the Federal Reserve (Fed) is evident. While the Fed maintains a relatively hawkish outlook with room for additional rate hikes, the BoJ expresses uncertainty about Japan's wage and inflation prospects and continues its policy easing to support economic activity. These differences in policy outlooks contribute to fluctuations in USD/JPY.
Market speculation regarding potential Japanese intervention in the foreign exchange (Forex) market to combat the depreciation of the Yen has capped the upside for USD/JPY. This, along with doubts about the Fed's upcoming policy decisions, warrants caution for bullish traders. The Forex market remains watchful, given these uncertainties.
Technical analysis reveals that the USD/JPY pair currently trades at 149.54, with key levels to watch. Daily moving averages, previous highs and lows, and Fibonacci levels provide valuable data for Forex traders. While the Forex market remains sensitive to economic releases and central bank actions, the USD/JPY pair's behavior is closely monitored by traders as they seek opportunities in this currency pair.