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USDJPY today maintained its mild gains around 133.70 as it snapped a three-day downtrend with a rebound from a one-month low marked on the previous day, March 13, 2023. The Yen pair managed to support the market from the moves caused by the US move to tame concerns over Silicon Valley Bank and Signature Bank being in financial trouble. Adding to the strength of the rebound, the price could be a recent recovery for the US Treasury yields after the previous day’s bond market debacle. The US 10-year Treasury yields were trading up and down around 3.56%, after rebounding from a monthly low of 3.418%. Meanwhile, its 2-year counterpart rebounded from its lowest level since September 2022 to post a mild gain of around 4.05%. It is worth noting that the US 2-year yields plunged the most since 1987 the previous day, while the latest rebound could be a reversal from the 200-DMA support level ahead of the key US data. It is worth reiterating that traders witnessed massive bond buying the previous day as the US banking regulators came to the defense of SVB and Signature Bank after the bank’s mishaps. The US banking regulators took a concerted action to tame the risks from SVB and Signature Bank over the weekend. While announcing the plan, Joe Biden noted on Monday that investors in the banks are not protected and also reminded that no one is above the law. However, Biden vowed to take whatever action is needed to ensure that the US banking system is safe. However, European and UK policymakers, along with some major Asia-Pacific countries have ruled out the possibility of witnessing a domestic financial crisis after SVB’s failure, which in turn might also be a breath of fresh air for USD/JPY buyers today. Alternatively, receding Fed bets with downbeat US inflation expectations joining market concerns amid Sino-US tensions and SVB talks seem to challenge USD/JPY buyers. Most importantly, Yen traders seem to be positioning themselves for the US CPI. However, the primary focus should be on risk and yield catalysts. US CPI is likely to fall to 6.0% year-on-year from 6.4% in the previous reading. Meanwhile, CPI ex Food & Energy fell to 5.5% year-on-year from 5.6% in the previous reading.
Technical Analysis
Although the 50-DMA restricts the USD/JPY pair’s immediate downside around 132.50, a recovery move remains elusive unless it remains below the previous support line from early February, which is around 136.20 at the time of writing.
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This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.
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