USD/JPY:Pullback 50% Fibo Level For A new LONG Setup

USD/JPY bounces back from a one-month low and holds onto slight gains around 133.70, as it snaps a three-day downtrend. The pair benefits from market consolidation following the recent US actions to tame fears arising from Silicon Valley Bank (SVB) and Signature Bank fallout. Additionally, the recent recovery in US Treasury bond yields after the previous day’s bond market turmoil adds strength to the pair's rebound.

Although the US 10-year Treasury bond yields fluctuate around 3.56%, after bouncing off the monthly low of 3.418%, the two-year counterpart rebounds from the lowest levels since September 2022 and prints mild gains of about 4.05% at the time of writing. It is worth noting that heavy bond buying was witnessed the previous day, following joint actions taken by US banking regulators to control the risks emanating from SVB and Signature Bank.

While policymakers from the UK, Europe, and some Asia-Pacific majors have ruled out the likelihood of a financial crisis at home after the SVB saga, receding hawkish Fed bets and downbeat US inflation expectations have challenged USD/JPY buyers, amidst US-China tensions and the ongoing SVB talks.