USD/JPY bears ignore BoJ’s Kuroda near 130.50 as yields retreat amid upbeat mood

• USD/JPY takes offers to refresh intraday low, reverses week-start gains.
• Yields remain pressured amid easing fears of banking crisis, inflation.
• Outgoing BoJ Governor Kuroda once again defends easy-money policy.
• US CB Consumer Confidence, banking headlines eyed for intraday moves.

USD/JPY pays little heed to Bank of Japan (BoJ) Governor Haruhiko Kuroda’s defense of easy-money policies as the Yen pair renews its intraday low near 130.50 while reversing the week-start gains during early Tuesday day. In doing so, the quote traces the recently downbeat US Treasury bond yields and the US Dollar amid cautious optimism in the market.

“It’s premature to debate an exit from easy monetary policy,” said BoJ Governor Kuroda during one of the last attempts to defend ultra-easy monetary policy before leaving the desk in April.

Also read: BoJ’s Kuroda: It’s premature to debate exit from easy monetary policy

That said, the US 10-year and two-year Treasury yields grind lower around 3.51% and 3.92% by the press time, paring the week-start rebound after witnessing a three-week downtrend. That said, the US Dollar Index (DXY) drops for the second consecutive day to 102.65, down 0.21% intraday by the press time.

While tracing the softer yields and US Dollar, the market’s optimism surrounding the banking sector and easing inflation seems to gain major attention. Behind the moves could be the US and European policymakers stretched emergency credit lines to the troubled banks and announced deposit insurance schemes. Recently adding strength to the risk-on mood were comments from the central bank officials pushing back the banking crisis concerns and the Silicon Valley Bank (SVB) deal.

Earlier in the day, US Treasury Department said that the US will keep using tools to prevent banking contagion as needed.  Before that, Federal Reserve Governor Philip Jefferson and Fed Vice Chair for Supervision Michael Barr showed readiness to tame the banking crisis while signaling ease in the inflation woes.

It’s worth noting that the recently downbeat US data weighed on the hawkish Fed bets, especially after talks of US recession, previously teased by Minneapolis Fed President Neel Kashkari, which in turn exerted downside pressure on the USD/JPY prices. On Monday, the US Dallas Fed Manufacturing Business Index dropped to -15.7 in March versus -10.9 expected and -13.5 prior.

On the flip side, the geopolitical fears surrounding China and Russia challenge the market’s upbeat sentiment, as well as the USD/JPY bears. That said, talks about China’s failure to keep the pace of growth promised, as well as Russia’s alleged readiness to use nuclear weapons against Ukraine. On the same line are the latest comments from North Korean Leader Kim Jong Un who recently stated, per KCNA news, “(They) should be fully ready to use nuclear weapons at any time.” Recently, Russia was said to have test-fired an anti-ship missile in the Sea of Japan.

Against this backdrop, Japan’s Nikkei 225 prints mild gains while tracing the S&P 500 Futures.

Moving on, the US Conference Board’s (CB) Consumer Confidence for March, as well as the second-tier housing and activity data, can direct intraday moves of the USD/JPY pair. However, major attention will be given to the US and Japan inflation clues, scheduled for release on Friday. Above all, the yields are crucial to aptly predict the Yen pair’s moves.

Technical analysis

A three-week-old falling wedge bullish chart formation keeps USD/JPY buyers despite the latest pullback. That said, the pattern currently occupies an area between 131.20 and 129.35.