The Japanese Yen gained momentum during the American session amid risk aversion, causing the USD/JPY to drop from the highest level in seven weeks near 137.75 to 136.36, hitting a fresh daily low.
US regional bank stocks are under pressure on Tuesday, weighing on market sentiment, despite the takeover of First Republic Bank.
US data came in a little softer than expected ahead of Wednesday's FOMC decision. Market participants still expect a 25 basis point rate hike, but bets of a rate cut later in the year have risen during the last hours. The US 10-year Treasury yield is falling more than 4% to 3.43%, while the 2-year fell from 4.14% to 3.94%, reaching the lowest levels since last Thursday.
The decline in government yields is helping the Japanese Yen. Wall Street indexes are falling by more than 1.5%, and the VIX has jumped 20%.
The USD/JPY pair is experiencing its largest daily loss in a month. The reversal is occurring from the 200-day Simple Moving Average (SMA), which is presently at 137.00. The next level of support could be found around 136.00, followed by 135.20. If the pair recovers above 137.20, it would ease the current bearish pressure.
Considering current price action in financial markets and upcoming key events such as the FOMC and ECB decisions, as well as the NFP, volatility is expected to remain high.
Technical levels
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