. After hitting a weekly low, the USD/JPY quickly recovered,

After hitting a weekly low, the USD/JPY quickly recovered, and Ueda defended the BoJ’s lax stance

After hitting a weekly low, the USD/JPY quickly recovered, and Ueda defended the BoJ’s lax stance

USdJPY

USD/JPY attracts fresh buying following a sharp intraday fall to the 129.80 area, or the weekly low.

Dovish remarks by the possible BoJ governor candidate weigh on the JPY and lend some support.

Hawkish Fed expectations, rising US bond yields underpin the USD and provide an additional boost.

The USD/JPY pair rebounds nearly 140 pips from the weekly low touched during the first half of the European session on Friday and now trades just above the 131.00 mark.

Reports that the Japanese government is likely to appoint Kazuo Ueda as the next Bank of Japan (BoJ) governor boost the domestic currency and prompt aggressive intraday selling around the USD/JPY pair. The initial market reaction, however, fades rather quickly after the possible BoJ governor candidate Ueda said that the current policy is appropriate and added they need to continue the easy policy. This, in turn, undermines the Japanese Yen (JPY), which, along with the emergence of fresh US Dollar buying, assists the pair to rebound swiftly from the 129.80 region.

The USD continues to draw support from diminishing odds for an imminent pause in the Fed’s policy tightening cycle. The expectations were lifted by the recent hawkish remarks by several FOMC officials, including Fed Chair Jerome Powell, stressing the need for additional interest rate hikes this week to fully gain control of inflation. This, in turn, pushes the US Treasury bond yields higher, which, in turn, benefits the Greenback. That said, looming recession risks lend some support to the safe-haven JPY and keep a lid on further gains for the USD/JPY pair.

TRADE SUGGESTION- BUY AT 130.450, TAKE PROFIT AT 131.349, SL AT 130.062

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