USD/JPY regains 111.00 as Treasury yields, USD recover despite mixed clues

USD/JPY flirts with 111.00, intraday top 111.11, as European traders brace for Monday’s bell. The risk barometer pair previously dropped amid softer US Treasury yields weighing on the US dollar while the latest rebound could be linked to the shift in sentiment.

Evergrande’s suspension from trading in Hong Kong and the US dislike for China’s activities near Taiwan recently weighed on the market sentiment of late. On the same line is the CNBC news, relying on sources, which said, “US Trade Representative Katherine Tai will announce that China hasn’t complied with the phase one trade deal during her speech on Monday.”

Furthermore, speculations that the struggled Chinese firm is up for selling $5.00 billion worth of assets adds strength to the risk-off mood, underpinning the US dollar’s safe-haven demand.

Meanwhile, the Fed tapering tantrum gains firmer and helps the US Treasury yields to snap a three-day downtrend. The latest blow could be linked to the firmer US inflation and consumer confidence figures.

It’s worth noting that the hopes of easing COVID-19 woes in the US and Japan join the expectations of multi-billion dollars worth of Japanese budget and US infrastructures spending bill to question the USD/JPY moves.

Amid these plays, US stock futures print mild losses while Japan’s Nikkei 225 drops over 1.20% by the press time.

Given the Fed tapering and rate hike concerns in focus, the US Nonfarm Payrolls (NFP) will be in focus. Also important will be the headlines relating to China’s economic transition, Japanese politics and Evergrande. On an immediate basis, US Factory Orders for August, expected 0.9% versus 0.4%, may offer intraday clues.

Read: US Initial Jobless Claims Rise for the Third Week: Was August's NFP a fluke?

Technical analysis

Failures to provide a decisive break above the 112.00 threshold joined overbought RSI conditions to trigger the latest USD/JPY weakness targeting August tops of 110.80.