USD/JPY: Fed cut repricing weighs on pair – MUFG

💡 DMK Insight

US 10-year Treasury yields are dropping, and here’s why that matters: lower yields typically signal a risk-off sentiment, which can impact both equities and crypto markets. With Fed fund futures now pricing in a June rate cut, traders should be on alert for potential shifts in asset allocations. A rate cut could lead to increased liquidity, benefiting risk assets like tech stocks and cryptocurrencies. However, if the market misreads the Fed’s intentions, we could see a sharp reversal. Watch for key levels in the 10-year yield; a sustained break below recent lows could trigger further buying in equities and crypto. On the flip side, if inflation data surprises to the upside, it could quickly shift sentiment back towards a hawkish Fed, leading to volatility across markets. Keep an eye on upcoming economic indicators, especially inflation reports, as they could dictate the Fed’s next move and influence market dynamics significantly.