USD/JPY Forecast: Bulls in control as yields keep raising

Valeria Bednarik FXStreet

USD/JPY Current price: 109.66

US Treasury yields continued advancing amid inflationary pressures concerns.
Speculative interest awaits US employment-related figures for additional clues.
USD/JPY trades near May high and is poised to extend its advance.

The American dollar remains the strongest currency across the FX board after the release of above expected US April´s inflation. The USD/JPY pair trades at the upper end of its monthly range, near a fresh May high at 109.78. Sharp losses in Wall Street dragged south overseas counterparts, with European and Asian equities trading well in the red. Meanwhile, government bond yields keep running, with the yield on the 10-year US Treasury note at the critical 1.70% level.

Japanese data published at the beginning of the day failed to impress. The Trade Balance posted a surplus of ¥983.1 billion in March, surpassing expectations, although the April Eco Watchers Survey Outlook contracted to 41.7. The US will publish the April Producer Price Index and Initial Jobless Claims for the week ended May 7, foreseen at 490K.

USD/JPY short-term technical outlook

The USD/JPY pair is bullish in the near-term and would likely extend its advance in the upcoming hours. Much will depend on how US Treasury yields develop. From a technical point of view, the 4-hour chart shows that the pair is comfortable well above all of its moving averages, with the 20 SMA advancing between the longer ones. Technical indicators resumed their advances after correcting overbought conditions, reflecting strong buying interest.

Support levels: 109.25 108.80 108.30

Resistance levels: 109.75 110.10 110.50

View Live Chart for the USD/JPY

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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