USD/JPY Price Analysis: Pierces under 114.00 as market sentiment worsens, and US T-bond yields fall

• The USD/JPY retreats under the 114.00 figure, falls some 0.30%.
• The US 10-year Treasury yield falls three basis points, sitting at 1.429%.
• USD/JPT Technical Outlook: It has an upward bias, as long as it trades above 112.53.

After piercing the 114.00 figure on Wednesday, the USD/JPY slides, trading at 113.67 during the New York session at the time of writing. As the American session progresses, the market sentiment is mixed, as US equity indexes fluctuate between gainers and losers after the last Federal Reserve monetary policy meeting.

On Wednesday, the US central bank revealed that they would increase the speed of the bond taper, beginning by the middle of January 2022. Moreover, the dot-plot, which projects the Federal Funds Rate expectations among Fed policymakers, shows that the FFR is expected to be at 0.90% by the end of 2022, meaning that the Fed would hike at least three times in 2022.

The USD/JPY reacted upwards after the monetary policy statement. However, the upward move was faded, as investors were fully priced in, per the market’s reaction.

In the meantime, US T-bond yields in the short-term are falling, led by 2s, 5s, and t0s, sliding between three and seven basis points, sitting at 0.6269%, 1.1848%, and 1.429%, respectively, a headwind for the greenback.

Meanwhile, the US Dollar Index, which measures the greenback’s performance against six peers, slumps 0.47%, cling to 96.05.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is trading under the 50-day moving average (DMA), at 113.80. Furthermore, as long as the spot price is above the 100 and the 200-DMAs, alongside the November 13 cycle low at 112.53, the bias is upward, so any retracement towards the aforementioned support level should be viewed as opportunities for USD bulls.

The first demand on the way down would be the December 10 cycle low at 113.22, followed by the figure at 113.00. The breach of the latter would expose the November 13 swing low at 112.53.