USD/JPY analysis: at 4-month highs on yields continued advance

USD/JPY Current price: 110.67

  • Japanese National CPI seen posting a modest advance in April.
  • T-yields support the rally, soft equities cap it.

The USD/JPY reached a fresh 4-month high of 110.85 on the back of rising US Treasury yields, as  the benchmark 10-year Treasury note reached 3.12% a new high since 2011, while for the 2-year note, yields peaked at 2.598%, also a fresh multi-year highs, both ending the day not far below those levels. The poor performance of Wall Street, however, once again limited the upside for the pair. Japanese data released at the beginning of the day disappointed, as Machinery Orders fell by more-than-expected in March, down 3.9% in the month, and by 2.4% when compared to a year earlier. During the upcoming Asian session, the country will release its National CPI for April. Inflation is expected to have advanced 0.7% yearly basis, down from the previous 1.1% while the core reading excluding volatile food and energy prices is forecasted to come at 0.4% from a previous 0.5%. The pair seems comfortable above 110.45, the immediate support, and despite the lack of upward momentum coming from technical readings, the upside remains favored. In the 4 hours chart, the pair keeps advancing well above bullish 100 and 200 SMA, while technical indicators have turned modestly lower near oversold readings.  The next relevant resistance and probable bullish target comes at 111.60.

Support levels: 110.45 110.00 109.60

Resistance levels: 110.85 111.20 111.60

View Live Chart for the USD/JPY

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