The government’s choice for the next central bank governor, Kazuo Ueda, gave a speech in parliament, which caused the USD/JPY to fall.

USD/JPY falls to 134.80 early on Thursday as bears seem keen to regain power after a four-day hiatus. Geopolitical worries, Japan’s holiday, and the hawkish Fed’s concerns threaten the downward trend. Consequently, the yen pair records modest losses on the first negative day in five.

The decline in US Treasury bond yields and inflation expectations, as seen by the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED), put downward pressure on the USD/JPY market after the initial boost to the yen.

While US President Joseph Biden believes that his Russian counterpart is unwilling to use nuclear weapons by withdrawing from an international treaty, the threat of nuclear war is waning.

The USD/JPY pair is also affected by hawkish worries about the Bank of Japan (BoJ), which are brought on by Governor Haruhiko Kuroda’s tenure is about to expire.

In contrast, according to the most recent minutes of the Federal Open Market Committee’s (FOMC) Monetary Policy Meeting, Fed members favor additional rate increases, boosting demand for the US Dollar. Moreover, the recent escalation of the conflict between the West and China has not eased concerns about the Ukraine-Russia confrontation.

Amid these moves, the S&P 500 Futures rebounded from the monthly low to post modest gains around 4,010, while the Treasury bond rates remain muted due to the Japanese sell-off. Notwithstanding, the US Dollar Index (DXY) falls 0.20% to 104.35 as of publication.

A shortage of essential data or events shortly may limit USD/JPY movement. Still, central bankers’ comments may keep traders entertained until Friday’s release of the US Core Personal Consumption Expenditures (PCE) Price Index data, the Fed’s preferred inflation indicator. Geopolitical news involving Russia, China, and the US should also be examined.