On Tuesday, the USD/JPY currency pair lost much of the ground it made on Monday. Spot prices increased a few pips from the day’s low and reached 131.00 in the early European session.

Risk-taking on the stock market makes the Japanese Yen (JPY) less attractive as a haven, which helps the USD/JPY pair. The market is less worried about contagion now that First Citizens Bank & Trust Company has bought Silicon Valley Bank from the FDIC. Also, regulators gave investors confidence that they would fix liquidity problems, making them more willing to buy riskier assets. But many signs warn against putting too much money on bulls at the top.

Under the new governor, Kazuo Ueda, the Bank of Japan (BoJ) may change its policy on controlling bond yields and reduce its vast stimulus, limiting Japanese yen losses. A slight drop in the US dollar (USD) could also keep the USD/JPY from increasing. The US Treasury bond yields went down last week after the Fed said it might delay rate hikes because of the instability in the banking sector. This makes the Greenback go down for a second day and puts pressure on the major.

Conclusion

So, strong follow-through buying is needed before positioning for an extension of the USD/JPY pair’s recent rally from the 129.65 zone, the lowest level since February 3 and where it was last week. Along with how people feel about risk, US bond rates can affect the USD price, creating short-term trading opportunities around the major.