USD/JPY daily chart
The dollar has seen some steadier tones in the last few sessions but USD/JPY endured a bit more of a mix of fortunes. The pair was down on Friday as bond yields fell but rebounded in trading yesterday. The bounce is keeping up somewhat today, with the pair now up 0.2% to just above 143.50.
It’s not indicative of much but the chart pattern is certainly starting to intrigue.
There looks to be a bit of a double-bottom pattern now near 142.00. And let’s see how that compares to the closely correlated 10-year Treasury yields chart.
US Treasury 10-year yields (%) daily chart
It is somewhat similar with yields finding a bit of a double-bottom near 3.67% as well. You can also ascribe it to the 3.70% level but that’s just semantics at this point.
So, what does this all say?
In a week where market players are going to have little to work with and turning their anticipation towards the Fed next week, the charts above likely indicate that there shouldn’t be a meaningful breakdown in either USD/JPY or 10-year Treasury yields in the days ahead.
That unless of course there is a major surprise to the narrative ahead of the Fed next week. The only one that I can think of will be the US CPI report tomorrow. But even that, I doubt it will matter too much.
Traders are convinced that the inflation monster has been slain and policymakers are also not making a great deal of it anymore.
So, if anything else, perhaps the weekly initial jobless claims might offer a bigger surprise factor – if any.
Otherwise, I’d wager we might just observe a more consolidative mood in both USD/JPY and the bond market until we get to the Fed next week. That at least based on what the charts are suggesting, with there being no technical breakdown for now.