Japanese yen under pressure as higher yields weigh | Forexlive

The hotter-than-expected UK inflation is not just seeing a reaction in domestic markets, as we are seeing spillover effects elsewhere today. Of note, the bond market is angsty with higher yields in play at the moment in European trading. 2-year Treasury yields are up 6 bps to 4.26% while 10-year yields are up 5 bps to 3.62% on the day.

That is pinning the Japanese yen lower across the board with USD/JPY seen up 0.6% to 134.85 and nearing a test of 135.00 at the moment. While that is a straightforward one, do keep an eye out on EUR/JPY though as the pair runs into the October highs in the region of 147.75 to 148.40 currently:

This is a pair that has been on a tear since the start of the month, after having bounced off its 100-day moving average (red line) two weeks ago.

It is now contesting the October highs from last year and a firm break above 148.00 could very well set off a run towards its December 2014 highs next at around 149.50-78 next.