USD/JPY hits a yearly high above 122.00, last seen Dec 2015

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  • USD/JPY keeps its foot on the gas, extending its rally to five straight days.
  • Fed officials hold the view that 50bp hikes are not bad.
  • US initial jobless claims fell below 200,000, the lowest level since 1969.

The pair USD/JPY continues to extend its rally, breaking the 122.00 mark, supported by the hawkish line talk from the Fed preparing to hike rates 50bps at the May meeting, which fueled a jump in US Treasury yields amid an upbeat mood in financial markets. At time of writing, USD/JPY trades at 122.30 at fresh yearly highs,

Lately, the market mood has improved as European equities made a U-turn after posting losses earlier in the American session. Meanwhile, US stocks consolidated higher, despite rising concerns of high inflation as the US central bank began its tightening cycle.

Firmer US dollar keeps Japanese yen under pressure
Meanwhile, the dollar remains resilient as it hangs on to gains, rising 0.12% to 98.724, while the 10-year US Treasury yield gains two and a half points to 2.341%.

Elsewhere, the conflict between Russia and Ukraine is drawing attention as NATO’s two-day summit takes place. It is noteworthy that, according to a senior US administration official, US President Biden told NATO that he supported NATO’s surge in troops on the Eastern Front. . The positive news on the front is that Ukrainian Chief of General Staff Andriy Yermak said there was progress in ceasefire negotiations with Russia and expressed “careful optimism”, the Axio correspondent reported.

US central bank policymakers made statements

Meanwhile, the Fed kept talking. The first lawmaker to speak was Minnesota Fed President Neil Kashkari. He said that there is a risk of exaggerating with rate hikes and reiterated that for him a neutral interest rate is around 2%. Later, Chicago Fed President Chris Evans said the Fed’s first rate hike was “the first of many this year.” Evans added that he is open to a 50 bps hike if needed and stressed that the central bank can start reducing the balance sheet while raising rates at the same meeting.

The US economic docket featured initial jobless claims for the week ending March 19, which fell the most since 1969. The reading was 187,000 lower than the 212,000 forecast. Later in the day, Markit PMIs for March were released, which were better than expected.

Technical levels

Source: Fx Street

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