USD/JPY Price Analysis: Plunges below 122.00 amid a soft US dollar and falling yields

• The USD/JPY is trimming gains for the second consecutive day, down 300-pips since Tuesday.
• A dismal market mood, a softer greenback, and falling US bond yields boosted the prospects of the yen.
• USD/JPY Price Forecast: Faced solid support around 121.20s, which lifted the pair towards 122.00.

The Japanese yen extends its gains for the second straight day as the USD/JPY pair retreats from multi-year highs around 125.00, on a dismal market mood and Japanese month-end-flows. At the time of writing, the USD/JPY is trading at 121.89.

On Wednesday, the market sentiment turned sour on the Kremlin’s remarks that even though Ukraine has put demands down on paper, they don’t see anything really promising and stated that there’s much work ahead.

Aside from this, the greenback has remained soft for two consecutive trading sessions, with the US Dollar Index, down 0.58%, sitting at 97.836, a headwind for the USD/JPY. US Treasury yields remain on the back foot, with the 10-year US T-note at 2.352%, down four basis points.

Overnight, the USD/JPY began the Asian session above 123.20 but dove towards the 200-hour simple moving average (SMA) at 121.25, a price level that found buyers, which lifted the pair towards the 121.90ish region.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is upward biased, despite the 300-pip retracement from 125.00s. Nevertheless, the Relative Strength Index (RSI) just got out of overbought conditions at 68.94, a signal that could push the pair higher. However, it would need a daily close above 122.00 in the event of relaunching another test towards the YTD highs above 125.00.

If that scenario plays out, the USD/JPY first resistance would be 122.00. Breach of the latter would expose March 25 to 122.43 daily high, followed by the 123.00 mark, which once cleared would pave the way towards 125.10.

Technical levels to watch