USD/JPY vs US Treasury 10-year yields (%) daily chart
10-year Treasury yields have now climbed back up to 4.20% and looking to push past its own 200-day moving average. Is it the economy trade? The inflation trade? Or perhaps the election trade? I’m quite sympathetic to the final reasoning to be honest. And that sort of ties in with inflation, should Trump come out on top and reignite trade wars.
But as yields surge higher, it is underpinning USD/JPY as the pair pushes to its highest levels since end July. The 151.00 mark is within touching distance now as the pair contests key technical levels on the chart.
The 50.0 Fib retracement level and 100-day moving average (red line) near 150.76 is being challenged now. And just above that, the 200-day moving average (blue line) is sitting close by at 151.33. That makes for a key resistance region for sellers to try and pin down price action and limit further upside.
A break of those levels though, will allow much breathing room for buyers. But at this stage, a lot of it will be driven by what will happen in the bond market as well.
It’s a tricky one to get the full picture there as traders will have to balance the mix of economic data against the election backdrop going into November.
But for today at least, the technicals are going to be one to provide some clues as to how things will play out next.