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  • USD/JPY retreated from 115.70 as investors dump DXY on Powell’s testimony
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USD/JPY retreated from 115.70 as investors dump DXY on Powell’s testimony

  • USD/JPY sliped near 115.44 as Powell’s testimony eased off 50 bps rate hike odds.
  • The DXY plunges on improvement in the risk appetite of investors.
  • The 10-year US Treasury yields inches near to 2%.

The USD/JPY pair has sensed selling pressure near 115.70 after a firmer rally from Tuesday’s low at 114.86 as the Federal Reserve (Fed) Jerome Powell’s testimony on Wednesday underpins the Japanese yen against the greenback.

The risk-perceived assets have found some ground after an ease in risk-on impulse as Powell’s testimony has indicated an interest rate hike by a 25 basis point (bps) in March’s monetary policy meeting. Rather than aiming at an aggressive tightening policy to curb the soaring inflation, the Fed has chosen the geopolitical crisis to address first. Therefore, the odds of a 50 bps interest rate hike have fallen significantly.

Investors have dumped the greenback post Powell’s testimony as the extent of the interest rate hike is very much unfolded now.

The US dollar index (DXY) has fallen sharply after hitting February 24 high around 97.74 on the cautious hawkish stance by the Fed. The 10-year US Treasury yields have hit 1.9%, surged strongly as an interest rate hike in March is on the cards.

Meanwhile, the peace talks between Russia and Ukraine are due on Thursday, which will have a significant impact on the market impulse. Any negative outcome from the truce talks between the nations will underpin the greenback again as investors would turn to defensives on improvement in safe-haven appeal.

Apart from the Russia-Ukraine war headlines, US Initial Jobless Claims will remain in focus while Japan’s docket will report its Unemployment Rate data, which are due on Thursday.


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