USD/JPY stays on the defensive
The Fed is going to be on hold for the short-term, and won't be hiking rates in the long term. Both those ideas are hurting the US dollar dollar today in different ways.
The quasi-announcement of a pause in the rate cutting cycle is ostensibly positive for short-term US rates, and the US dollar by extension. But it's more-negative for risk assets like stocks and that's weighing on USD/JPY (but less so on the dollar broadly).
In the long-term Powell indicated the Fed won't hike even if inflation jumps. That's pulled down longer-term rates. The US 30-year yield is down 8 bps to 2.17%. It's a signal that the US isn't likely to reclaim a significant yield advantage any time soon. That is also hurting it against the yen.
As a result, USD/JPY is down 90 pips in an outsized move compared to the rest of the market (gold is also benefiting from the same factors).
Technically, USD/JPY has broken the Oct 23 low and is now testing the minor uptrend since August. A break lower and continued dip in risk sentiment would take the pair back to the October lows. Non-farm payrolls will have a big say in that.
