#USDJPY @ 135.621 drifts lower for the second successive day on Monday, albeit lacks follow-through. (Pivot Orderbook analysis)

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• USD/JPY drifts lower for the second successive day on Monday, albeit lacks follow-through.
• Retreating US bond yields keeps the USD bulls on the defensive and exerts some pressure.
• The divergent Fed-BoJ policy outlook limits losses ahead of this week’s key event/data risks.

The pair currently trades last at 135.621.

The previous day high was 136.79 while the previous day low was 135.74. The daily 38.2% Fib levels comes at 136.14, expected to provide resistance. Similarly, the daily 61.8% fib level is at 136.39, expected to provide resistance.

The USD/JPY pair remains under some selling pressure for the second successive day on Monday and moves further away from the YTD peak, around the 137.10 region touched last week. The pair, however, recovers a few pips from the daily low and trades just above mid-135.00s during the early European session, down around 0.20% for the day.

The US Dollar kicks off the new week on a subdued note amid a modest downtick in the US Treasury bond yields and turns out to be a key factor weighing on the USD/JPY pair lower. Apart from this, looming recession risks seem to benefit the safe-haven Japanese Yen (JPY) and contribute to the offered tone surrounding the major. Worries about a deeper global economic downturn resurfaced after China set a lower-than-expected target for economic growth and forecast that the economy would expand by 5% in 2023.

The downside for the USD/JPY pair, meanwhile, seems cushioned amid the divergent Bank of Japan-Federal Reserve monetary policy outlook. In fact, the incoming BoJ Governor Kazuo Ueda stressed the need to maintain the ultra-loose policy to support the fragile economy and said last week that the central bank isn’t seeking a quick move away from a decade of massive easing. In contrast, the US central bank is universally expected to stick to its hawkish stance and keep rates higher for longer to tame high inflation.

The incoming US macro data indicated that inflation isn’t coming down quite as fast as hoped and pointed to an economy that remains resilient despite rising borrowing costs. Adding to this, a slew of FOMC members backed the case for higher rate hikes and opened the door for a 50 bps lift-off at the March policy meeting. This should act as a tailwind for the US bond yields and favours the USD bulls, which supports prospects for the emergence of dip-buying around the USD/JPY and warrants caution for bears.

Traders might also prefer to move to the sidelines ahead of this week’s key event/data risks, starting with Fed Chair Jerome Powell’s semi-annual congressional testimony on Tuesday and Wednesday. Investors will look for fresh clues about the Fed’s future rate-hike path, which will play a key role in influencing the near-term USD price dynamics. This will be followed by the BoJ monetary policy meeting on Friday and the release of the closely-watched US monthly employment details, popularly known as NFP.

Technical Levels: Supports and Resistances

USDJPY currently trading at 135.59 at the time of writing. Pair opened at 135.83 and is trading with a change of -0.18 % .

The pair is trading above its 20 Daily moving average @ 134.1, above its 50 Daily moving average @ 132.08 , below its 100 Daily moving average @ 136.63 and below its 200 Daily moving average @ 137.31

The previous day high was 136.79 while the previous day low was 135.74. The daily 38.2% Fib levels comes at 136.14, expected to provide resistance. Similarly, the daily 61.8% fib level is at 136.39, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 135.46, 135.08, 134.41
• Pivot resistance is noted at 136.5, 137.17, 137.55

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