USD/JPY traces sluggish yields near 32-year high below 149.00 as BOJ policies appear in danger

• USD/JPY bulls take a breather around 32-year high, probing eight-day uptrend.
• Light calendar, cautious optimism offers sluggish session, weigh on yields.
• Fedspeak remain hawkish but search for replacement of BOJ’s Kuroda challenges Japan’s easy money policies.
• Risk catalyst will be the key for near-term directions, bears may retake control on Tokyo’s intervention.

USD/JPY portrays a sluggish start to the week as it seesaws around mid-148.00s while tracking the mixed performance of the markets during Monday. In doing so, the yen pair retreats from the highest levels since 1990, marked the previous day, while printing the first daily loss in nine.

Earlier in the day, Bank of Japan Governor (BOJ) Haruhiko Kuroda said, “It is appropriate to continue monetary easing,” while also adding that he expects Consumer Price Index (CPI) to fall short of 2% in fiscal 2023.

However, comments from Japan Prime Minister (PM) Fumio Kishida seemed to have weighed on the JPY as he said, “Will consider a successor to BOJ Governor Kuroda, taking into account monetary policy foreseeability, coordination with the government.”

With this, the BOJ’s ultra loose policies will be in question amid the global push for higher rates.

That said, US 10-year Treasury yields struggle to extend the latest upside near the 4.0% threshold amid easing fears of the UK market’s collapse, especially after the recent appointment of Jeremy Hunt as the new British Chancellor, as well as keeping the tax rate unchanged.

Elsewhere, mixed comments from the Fed policymakers and the absence of chatters surrounding the Fed’s 1.0% rate hike also probe the pessimists. During the weekend, St. Louis Federal Reserve Bank President James Bullard said, “The US has a serious inflation problem,” the policymaker also adds, “Front loading fed policy is the right strategy.”

It should be noted, however, that firmer US data and geopolitical fears emanating from China and Russia, as well as from North Korea, keeps the USD/JPY bulls hopeful. Alternatively, the Japanese government’s intervention is looming as the yen drops to the multi-year. In that case, the yen pair may extend the latest weakness.

Technical analysis

A three-month-old ascending resistance line, at 149.10 by the press time, restricts immediate upside ahead of the 150.00 threshold. Even so, sellers may not take the risk of entries unless breaking a three-week-old ascending support line, at 146.30 as we write.