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USD/JPY down slightly but still largely trapped in a technical box for now

USD/JPY daily chart

USD/JPY climbed on Monday only to erase that advance on Tuesday and is now settling marginally lower on the week. Price is slipping back below 150.00 as the push and pull continues over the last month or so.

In terms of overall price action, the pair is very much trapped inside a technical box as seen above. At some point last week, sellers threatened with a downside break as we saw a low of 149.20. However, that was culled as price moved back to close at 149.97 on Thursday.

And so, that continues to put us in a bit of a dilemma at the moment. For one, price is surprisingly holding up well despite a break lower in the bond market.

10-year Treasury yields finally broke back under the 4.20% mark and is now even sliding below the 200-day moving average of 4.176%. Yields are seen near 4.15% today but that hasn’t been enough to draw out a stronger move in USD/JPY just yet.

I reckon traders are also anxious in waiting for the BOJ to provide a firmer signal on a policy pivot. We’re weeks away from getting some indications on the spring wage negotiations in Japan. And that might be the catalyst to finally kick start a drive lower in USD/JPY in the short-term.

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