USD/JPY resists tracing firmer yields, DXY below 145.00 amid hawkish BOJ concerns

• USD/JPY grinds higher around 24-year top, probes three-day uptrend.
• BOJ Minutes highlights the need for vigilance on sharp yen moves.
• US 10-year Treasury bond yields rose to 12-year high, DXY renewed the highest levels since May 2002.
• No major data on calendar, Fed’s Powell may please bulls if managed to defend heavy rate hikes.

USD/JPY skates on thin ice in the last two days, taking rounds to 144.70 during early Wednesday morning in Europe. In doing so, the yen pair fails to tracks the firmer US Treasury yields and the US Dollar Index (DXY) while also paying a little heed to the risk-off mood. The reason could be linked to the Bank of Japan’s (BOJ) latest monetary policy meeting and the BOJ’s Japanese Government Bond (JGB) buying activity.

That said, the US Dollar Index (DXY) renews the 20-year high near 114.70 while the US 10-year Treasury yields jump to 4.0% for the first time since 2010.

Earlier in the day, BOJ released the Minute statement of the latest monetary policy meeting. As per the statement, the board members agreed that the inflationary impact of the yen's recent sharp moves must be closely scrutinised, but policymakers reiterated their resolve to keep policy loose even as the currency's rapid fall has unsettled financial markets, per Reuters.

On the other hand, the BOJ said it offered in the morning to lend 1.4628 trillion yen in Japanese government bonds (JGBs) as a secondary source of supply of some issues for settlement today under an agreement expiring on September 29.

Elsewhere, comments from the White House (WH) Economic Adviser Brian Deese and San Francisco Fed President Mary Daly, not to forget pessimism emanating from China and Europe, seemed to have weighed on the market sentiment. WH Economic Adviser Deese’s comments that he does not anticipate the need for the global accord to adjust currency values seemed to have pleased the US dollar bulls of late. The policymaker also stated, “I'm fundamentally optimistic about the US economy, which can emerge stronger than before the pandemic.”

On Tuesday, US Durable Goods Orders declined by 0.2% in August versus the market forecasts of -0.4% and the revised down prior reading of -0.1%. Additionally, US CB Consumer Confidence improved for the second consecutive month to 108.00 for September versus 104.5 expected and 103.20 prior.

Amid these plays, the S&P 500 Futures drop 0.50% intraday to poke the 21-month low marked the previous day.

While the risk-off mood battles the BOJ’s defense of the yen, the USD/JPY traders may closely watch Fed Chairman Jerome Powell’s speech to overcome the immediate trading hurdle.

Technical analysis

A three-week-old descending resistance line around 145.00 is the immediate key hurdle that holds the gate for the USD/JPY pair’s run-up towards the fresh 24-year, currently around 145.90.