It all started with equities last month, as Nvidia sent stocks into overdrive. Then, we saw the likes of gold and Bitcoin soar to fresh record highs. And earlier this week, we got a break lower in Treasury yields as the bond market reacted as well. Now, we’re finally seeing FX traders make their move as the dollar tilts lower.
In particular, USD/JPY has fallen from around 150.00 all the way to 148.50 levels currently. The fall has also took price action out of the technical box outlined yesterday here. Some hawkish murmurs regarding the BOJ is helping to fuel yen gains but the decline in USD/JPY is also in part due to action in the bond market:
USD/JPY vs US Treasury 10-year yields (%) hourly chart
It’s a key development that is worth noting as 10-year yields not only fell back below 4.20% but also took out its 200-day moving average, now seen at 4.178%. As such, that is weighing further on the dollar across the board.
And considering its correlation to the central bank outlook, lower rates are also a boon for risk assets at this point in time.
Going back to FX, it isn’t just USD/JPY that is on the move since yesterday. EUR/USD is holding around 1.0900 at its highest levels in six weeks while AUD/USD is also contesting two-week highs around 0.6580-95 now.