• The falling yields and the risk-off mood benefitted the safe-haven JPY.
• Following the US, the UK has also announced fresh sanctions on Russia after its war in Bucha.
• Market is ignoring the impact of hawkish stance of the Fed.

The yen pair traded low on Thursday trading session on falling yields and the prevalent cautious market mood.

The prevalent cautious market mood had drove some haven flows towards the Japanese yen and exerted some downward pressure on spot prices amid a softer tone surrounding the US dollar. After the US,  the UK has announced fresh sanctions on Russia after its war crimes in Bucha, Ukraine. The UK administration has imposed an outright ban on all new outward investment into the country, as per Reuters. Additionally, UK also made an announcement of an asset freeze on Russia’s Sberbank and Credit Bank of Moscow, which hold more than one-third of Russia’s total banking assets.

Bank of Japan board member Asahi Noguchi said that the central bank must maintain its ultra-easy monetary policy, even as rising commodity prices are expected to push inflation higher. Asahi Noguchi said on Thursday that the benefits of a weak yen outweigh the demerits for Japan’s export-oriented economy, brushing aside the view the currency’s recent decline would hurt the economy by boosting import costs.

He said “Unlike other countries worried about surging inflation, Japan’s primary goal is to end deflation and prop up inflation to more desirable levels.”A weak yen is more favourable for achieving this goal than a strong yen, which would push down prices and hurt exports, he added.

On the other hand, It looks like market participants are ignoring the impact of the hawkish stance from the Federal Reserve (Fed), which is likely to be revealed in May’s monetary policy. The minutes of March’s Federal Open Market Committee (FOMC) released on Wednesday dictated that the Fed is looking to hike the interest rates by 50 basis points once or more this year. To contain the inflation mess, the Fed is left with no other option than to paddle the lending rates.

USD/JPY 4 Hour Chart:

Support: 123.47 (S1), 123.16 (S2), 122.87 (S3).

Resistance: 124.07 (R1), 124.36 (R2), 124.67 (R3).

Investors are cautiously optimistic for yen amidst prevailing risk off market sentiment; we expect a bearish trend for USD/JPY.