USD/JPY braces for yearly top near 111.00 on US Treasury yield rebound

  • USD/JPY prints three-day uptrend as bulls attack April’ high.
  • Market sentiment dwindles after Fed’s Powell defends easy money, US-China tussles escalates.
  • BOJ minutes cite lack of agreement over the economic outlook, Kuroda met PM.
  • US PMIs, Fedspeak will be the key along with the risk catalysts.

USD/JPY portrays broad US dollar recovery while refreshing the two-month high with 110.85, up 0.16% intraday, as European traders prepare for the trading bell. The major currency pair recently benefited from the market’s reassessment of the risk catalysts, not to forget mixed updates from the Bank of Japan (BOJ) and data from Tokyo.

Japan’s Leading Economic Index for April rose past 103.00 forecasts and prior to 103.80 but the BOJ minutes, published earlier in Asia, unveils differences among the policymakers over the economic growth. Additionally, the preliminary reading of Jibun Bank Manufacturing PMI for June, 51.5 versus 52.3 market consensus, also weakened the Japanese yen, favoring USD/JPY bulls in turn.

It’s worth noting that BOJ Governor Haruhiko Kuroda’s meeting with Prime Minister Yoshihide Suga raised doubts over the economic strength even as the BOJ Boss rejected any such concerns or requests from the government.

Above all, a rebound in the US Treasury yields on the back of Fed Chair Jerome Powell’s defensive play, during the previous day’s testimony, favors the USD/JPY bulls. That said, stock futures are also mildly bid but lack direction ahead of the key US PMI figures. Although forecasts suggest soft numbers, bond bears await softer outcomes to keep USD/JPY on the front foot.

Technical analysis

A two-month-old ascending trend channel keeps USD/JPY buyers hopeful until the quote stays beyond 109.60. However, the 111.00 threshold becomes the tough nut to crack on the way north to March 2020 tops near 111.70.

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