USD/JPY steadies below 148.40 resistance amid sluggish yields ahead of FOMC, NFP

• USD/JPY struggles to overcome fortnight-old downtrend during two-day advances.
• Market’s remain cautious ahead of the key central bank meetings, data.
• Mixed data from Japan, BOJ’s dovish play keeps buyers hopeful unless Fed disappoints markets with less than 0.75% rate hike.

USD/JPY grinds higher past 148.00 during the second consecutive positive day, up 0.45% while retreating from the daily high of 148.26. The yen pair’s latest inaction could be linked to the market’s mixed sentiment, as well as anxiety ahead of the Federal Open Market Committee (FOMC) meeting announcements and the US jobs report for October.

That said, the US 10-year Treasury yields seesaw near 4.00% after snapping the 10-week uptrend by the end of Friday. Also challenging the USD/JPY traders is the mixed moves of the equities as the US equity future prints mild losses even after Dow Jones braces for the biggest monthly jump since 1976.

Earlier in the day, Japan’s Industrial Production came downbeat for September but Retail Sales defended the yen optimists. “Japan's factory output fell in September for the first time in four months as manufacturers grappled with rising raw materials costs and global economic slowdown, and is likely to fall again next month before picking up in November, the government said,” per Reuters.

Elsewhere, news of Macau’s lockdown of a casino resort and fears emanating from Russia underpin the USD/JPY upside, due to the US dollar’s safe-haven status. “Russia, which invaded Ukraine on Feb. 24, halted its role in the Black Sea deal on Saturday for an ‘indefinite term’ because it could say it could not ‘guarantee the safety of civilian ships’ traveling under the pact after an attack on its Black Sea fleet,” reported Reuters. On the other hand, the concerns that the Fed might discuss slowing down on the rate hikes from December seem to challenge the pair buyers of late.

It should, however, be noted that the Bank of Japan’s (BOJ) hesitance to alter the monetary policy versus the Fed’s hawkish mood keeps the USD/JPY buyers hopeful.

Technical analysis

Although a two-day-old ascending trend line keeps USD/JPY buyers hopeful unless the quote breaks the 146.90 support, the 200-HMA challenges the yen pair’s upside momentum near 148.40.