USD/JPY reverses in tandem with USD, T-yields, near 109.00
- Bulls running out of steam, back to test 109 handle.
- Risk-off in equities underpinning the Yen demand?
The USD/JPY pair is seen reversing a part of the intraday rally, as the US dollar attempts a minor correction versus its major peers after the upsurge to the highest levels in three-months reached at 91.11.
The greenback’s rally was mainly fuelled by the 10-year Treasury yields’ climb above the key 3 percent levels, as markets turn optimistic on the US economic prospects, which could lead to a faster pace of Fed tightening in the coming months.
The latest leg down in the spot can be attributed to the sell-off in the global equities, which spooks the markets and underpins the demand for the Yen as a safe-haven. The US companies warned of higher borrowing costs amid rising Treasury yields, pointing towards the end of the corporate earnings boom.
In the session ahead, the pair will continue to track the USD price-action amid a lack of the US economic news, as attention turns towards Friday’s Bank of Japan (BoJ) monetary policy decision for fresh impetus on the Yen.
USD/JPY levels to watch
Karen Jones, Analyst at Commerzbank explains: “USD/JPY has reached the 50% retracement at 108.98 and directly above here lies the top of the cloud at 109.32. This may hold the initial test/provoke some consolidation, but beyond this, there is scope for the 200-day ma at 110.28. Key resistance remains the 112.44 2015-2018 downtrend. Dips lower will find initial support at the 107.24 20 day ma and the 105.66 current April low.”