USDJPY Makes Progress Towards a Fresh Daily High

USDJPY makes progress toward a fresh daily high. The positive gains experienced by USDJPY this week are significant, and the bulls have been in control. The market draws support from several factors, which have contributed to the buying progress. Even during the European session, the currency pair has been making steady progress toward a new high. Currently, it has reached the 131.000 key zone, which is a positive sign for the bulls.

US Bond Weakens Japanese Yen

The equity markets are currently showing a positive trend, which is causing the Japanese Yen (JPY) to weaken. This is having a positive impact on the USD/JPY pair. First Citizens Bank & Trust Company’s recent acquisition of Silicon Valley Bank’s deposits and loans from the FDIC (Federal Deposit Insurance Corporation) has helped to quiet the market’s fears of a contagion threat. Additionally, reports of US authorities considering expanding emergency lending facilities have increased investors’ appetite for riskier assets. As a result, the US Treasury bond yields have risen, leading to a widening of the US-Japan rate differential, which is further weakening the JPY and strengthening the  USD/JPY currency pair.

The US Dollar (USD) bulls have been holding back on placing revived wagers due to the Federal Reserve’s signal that it might soon pause its rate-hiking cycle in light of recent turmoil in the banking sector. This could mean any meaningful appreciating move for the major currency is limited, and investors are taking a cautious approach. On Wednesday, as expected, the US central bank raised interest rates by 25 bps but sounded prudent about prospects. Furthermore, expectations that Bank of Japan (BoJ) Governor Kazuo Ueda would nip their bond yield management policy and whittle down their enormous impulse has also contributed to capping profits for USD/JPY pair traders.

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