USD/JPY Forecast: Yields remain as the main motor

Valeria Bednarik FXStreet

USD/JPY Current price: 109.39

US Treasury yields temporarily rose with US inflation data but ended the day in the red.
Japan will publish the Q2 BSI Large Manufacturing Conditions Index on Friday.
USD/JPY is neutral in the near-term but bullish in the wider perspective.

The USD/JPY pair peaked for the day at 109.79 but ended the day with losses in the 109.40 region. The dollar got a temporal boost from US inflation data, which was upwardly revised to 5% YoY in May. Government bond yields jumped higher, with the yield on the 10-year Treasury note hitting 1.53%, later retreating to the 1.47% price zone where it stands at the end of the day.

Japan published the May Producer Price Index, which beat expectations by hitting 4.9% YoY. On Friday, the country will publish the Q2 BSI Large Manufacturing Conditions Index, previously at 1.6.

USD/JPY short-term technical outlook

The USD/JPY pair continues to lack clear directional strength in the near-term, although the wider perspective favors the upside. In the 4-hour chart, the pair is hovering around its 20 SMA, but above the longer ones, all of them with modest bullish slopes. Technical indicators are back to their midlines without signs of an imminent move.

Support levels: 109.20 108.90 108.55

Resistance levels: 109.85 110.30 110.75

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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