USD/JPY to race higher as US Treasury yields continue to rise

The consolidation in the USD/JPY over the past two weeks has given a firm base at 108.50. Meanwhile, US 10-Year Treasury yield climbed above 1.7%, a 14-month high. If American Treasury rates continue to rise they will pull the USD/JPY higher, according to FXStreet’s Analyst Joseph Trevisani. 

Key quotes

“With the US Federal Reserve apparently happy or at least tolerant of rising Treasury and commercial yields and the BOJ quietly pleased, the direction of the USD/JPY is higher. Nonetheless, even under this fundamental impetus, the longer the pair lingers without new highs, the greater the temptation for traders to book some of those gains.”

“The USD/JPY ranged above 110.00 for much of 2018 and 2019 so there is no fundamental reason that if US rates continue to rise, it could not return to those levels.”

“Technical analysis shows the USD/JPY has good support at 108.50 and at 107.90. Immediate resistance at 109.35 and 109.65 is weak. The early pandemic plunge and recovery from late February to late March last year will give little pause one way or another, the traded volumes on those panicky days were far too thin for positioning.”


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