USD/JPY vs US Treasury 10-year yields (%) daily chart
After the hiatus yesterday, Treasury yields are pushing higher to start the new week with 10-year yields now nearing 4%. That is among a few reasons underpinning the dollar this week, but is a key driver for the push higher in USD/JPY that we are seeing. The pair is now trading to the highs seen last week, pushing just above 146.00 ahead of European trading.
The high last week touched 146.41 but the daily close ended up below the 50.0 Fib retracement level of the swing lower from November to December, seen at the 146.07 level. As such, that will remain the critical resistance level once again for trading this week.
If buyers can hold a break and daily close above that, it will tee up a test towards the 38.2 Fib retracement level at 147.45 and 100-day moving average (red line) next at 147.39 currently.
That being said, a lot will also still depend on bond market developments. While 10-year yields are looking to push back above 4%, the 200-day moving average at 4.077% remains elusive for the time being. Adding to that, there’s still questions surrounding the strong bids in the front-end of the curve that we saw at the end of last week. Will that come back again later today in Wall Street trading?