USD/JPY looks for further upside correction on higher yields | Forexlive
The dollar is running hot today as it is underpinned by higher bond Treasury yields, with 10-year yields in the US moving back up above the 4% mark. That is a signal of intent by the market, in pricing in a more aggressive Fed for the months ahead. That is resulting in USD/JPY being up 0.5% to 136.80 levels and now testing the boundaries of its 100-day moving average (red line) at 136.75.
The 200-day moving average (blue line) isn’t far away at 137.25 with the 38.2 Fib retracement level of the downswing since October last year seen at 136.66 adding to the daily resistance for the pair currently.
It’s pretty much a confluence of key resistance levels and if that breaks, it might very well result in a quick jump towards 140.00 next for USD/JPY.
For all the talk of a BOJ pivot coming this year, it seems like the lack of assurance of a Fed pivot for now is enough to turn the tables for the pair. I mean, Ueda trying to sound like Kuroda – at least for now until he gets the job – isn’t helping the case for yen bulls.
In any case, USD/JPY is very much moving in tandem with the bond market at the moment and here’s another proof of that:
As such, keep an eye out on 10-year Treasury yields and if it is going to run higher on the break above 4%. That will be a telling factor for USD/JPY as well.