USD/JPY stays supported by US yields – Danske Bank

Pablo Piovano FXStreet

Senior Analyst at Danske Bank Morten Helt assessed the prospects for the pair in light of the recent performance of US yields.

Key Quotes

“USD/JPY remains supported by rising 10Y US yields and the combination of a neutral speculative JPY positioning and higher US 10Y yields could be a supporting factor for USD/JPY near term (as long as US interest rates volatility does not increase)”.

“However, our fixed income strategists do not expect a strong sell-off in fixed income markets given the business cycle outlook and still dovish central banks, and short-term technical indicators, such as RSI, indicate that USD/JPY is overbought, suggesting that the rally in USD/JPY might lose momentum”.

“The break of 108 on 23 April most likely has widened the trading range to 105-110: However, it would in our view, require a substantial dovish shift in the BoJ’s rhetoric on Friday (not our call) for USD/JPY to settle above 110”.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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