The Japanese Yen has started looking pretty as the global rate differentials narrow. There is a sharp correction in the lower area of the USD/JPY chart, which extends further after key technical barriers have been breached, especially the 50DMA, which has defined the uptrend for most of the year. Consequently, the currency pair is set to post its biggest drop since the 2020 Covid crash, with the Japanese Yen on the better side of the equation.
Fed Chair Powell stated that interest rate hikes might rise slowly since they are currently neutral suggests that we are probably past peak hawkishness
That being said, key support now sits at 131.50. The bearish USD/JPY would prefer to see the 50DMA hold. With the break below 2.70% in the US 10Y yield, there appears to be a head and shoulders, projecting 1.90%; this is, however, not unreasonable now that bond yields have continued to drop, even when the Federal Reserve has hiked 75bps back to back.