USD/JPY bulls taking control as US yields rise

USD/JPY is firm at the start of the week trading up by 0.1% on the day so far as the US dollar maintains its form on the bid. 

US yields have been creeping higher and giving the dollar a boost of late. 

 The 10-year yield is trading around 1.67% today, up from the lowest since March 26 and trading 0.43% higher on the day so far.

''Still, the 10-year remains well below the March 30 peak near 1.77% and break of the 1.71% level is needed to set up a test of that cycle peak,'' analysts at Brown Brothers Harriman (BBH) said. 

''Similarly, the 30-year yield  is trading around 2.35%, up from yesterday’s 2.30% that was the lowest since March 25. 

Here too, the 30-year yield remains well below the March 18 peak near 2.51% and break of the 2.40% level is needed to set up a test of that cycle peak.''

Meanwhile, there has been some attention paid to Federal Reserve's Jerome Powell's prior 60 minutes interview today:

Fed's Powell: Does not want inflation to go materially above 2% and return to the bad, old inflation days

Looking forward, the March US Consumer Price Index will be reported this Tuesday, with headline expected at 2.5% YoY vs. 1.7% in February and core expected at 1.6% YoY vs. 1.3% in February.

The data will be important for the greenback and USD/JPY. 

Elsewhere, traders will take note that Japan reimposed restrictions in Tokyo, Kyoto, and Okinawa because Japan is galling behind in its vaccine rollout.

''The weaker yen is a tailwind for the economy and so it’s too early to say how these conflicting factors will work out,'' the analysts at BBH said,

''Of note, there is rising chatter that Japan investors may adjust their hedge ratios on overseas bond portfolios lower from the full hedging seen last fiscal year.  If so, this would signal less concern about a strong yen and would also put further downward pressure on the yen.''