USD/JPY took its cues from U.S. Treasury yields and prolonged its intraweek features yesterday.

Is the short-term downtrend over for the pair?

Earlier than transferring on, ICYMI, yesterday’s watchlist checked a development pullback setup on GBP/AUD forward of Australia’s CPI launch. Make sure to try if it’s nonetheless a legitimate play!

And now for the headlines that rocked the markets within the final buying and selling classes:

Recent Market Headlines & Financial Knowledge:

U.S. CB shopper confidence unexpectedly improved from 103.4 to 104.2 in March however confirmed customers chopping again on discretionary spending like amusement components, lottery, and eating out.

U.S. single-family dwelling costs up by 3.8% y/y in January and marked its ninth straight month of deceleration as mortgage charges resumed their downtrend.

The US goods-trade deficit widened by 0.6% m/m in February to $91.6B – the widest since October – because the decline within the worth of exports outpaced the decline within the worth of imports.

Canada posted a finances deficit of 6.44B CAD within the first ten months of the 2022-2023 fiscal 12 months, down from the 75.29B CAD deficit in the identical interval final 12 months.

Fed’s vice chair for supervision Michael Barr referred to as SVB’s failure “a textbook case of mismanagement” and that “the complete extent of the financial institution’s vulnerability was not obvious till the sudden financial institution run on March 9.”

The U.S. imposed new commerce restrictions on 5 Chinese language firms over “human rights violations” towards the Uyghur Muslim group.

The yield on the 2-year U.S. Treasury word jumped again above 4% and put stress on the U.S. tech sector.

API confirmed U.S. crude oil inventories dropping by 6.076 million barrels within the week ended March 24 after a 3.262 million-barrel construct within the earlier week.

Australia’s inflation decelerated from 7.4% to an eight-month low of 6.8% in February and supported a pause in RBA’s fee hikes.

BOJ Deputy Governor Shinichi Uchida says some modifications to the yield curve plans “could change into crucial” if “varied circumstances fall in place.”

Alibaba’s choice to separate its holding firm into six completely different enterprise teams pointed to China’s looser stance on the tech sector and helped increase danger urge for food through the Asian session.

Worth Motion Information

Overlay of JPY Pairs 15-min

The safe-haven yen slowly however certainly misplaced worth towards its main counterparts through the Asian session.

There’s nobody massive catalyst for the coordinated weak spot however increased U.S. Treasury yields could have factored in USD/JPY’s energy and different yen counterparts could have adopted swimsuit.

In the meantime, information of Alibaba splitting its holding firm into six enterprise teams energized the Asian markets since China permitting the transfer is encouraging for China’s tech sector.

JPY has recouped a few of its losses towards AUD and NZD however the safe-haven continues to make new intraday lows towards the others through the European session.

Upcoming Potential Catalysts on the Financial Calendar:

UK’s mortgage approvals and web particular person lending at 8:30 am GMT
UK’s Monetary Coverage Committee (FPC) quarterly assertion and assembly minutes at 9:30 am GMT
SNB’s quarterly bulletin at 1:00 pm GMT
US pending dwelling gross sales at 2:00 pm GMT
EIA crude oil inventories at 2:30 pm GMT
NZ constructing consents at 9:30 pm GMT
NZ ANZ enterprise confidence at 12:00 am GMT (Mar 30)

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USD/JPY 15-min Foreign exchange Chart by TradingView

Larger U.S. Treasury yields have helped bust USD/JPY from its 130.50 intraweek assist ranges to its present 131.80 costs.

It’s fascinating to notice that USD/JPY’s upswing yesterday has propelled the pair above a development line resistance that was stable for not less than two weeks.

Will yesterday’s breakout translate to sustained bullish momentum?

USD/JPY is already having hassle breaking above the 132.00 psychological degree that’s close to the R2 of at the moment’s Commonplace Pivot Factors.

If U.S. Treasury yields prolong their features at the moment, or if risk-taking weighs on JPY greater than USD, then USD/JPY might head for increased inflection factors like 130.50. This might mark a full ATR transfer.

But when Treasury yields see pullbacks, or if yen repatriation forward the top of the month boosts demand for JPY, then USD/JPY might retrace to the damaged development line resistance.