- The dollar continues to rally against the yen, despite the extension and overbought indicators.
- Divergence between the Bank of Japan and the Federal Reserve remains key.
- Treasury bond yields hit new highs in years.
The USD/JPY far from pausing or correcting lower, accelerated the bull run and climbed from 127.05 to 128.45, reaching levels last seen in April 2022. The pair remains in the high zone, with the bullish tone intact.
The dollar continues to be supported by the divergence between the expectations of the monetary policy of the Federal Reserve and the Bank of Japan. While more aggressive interest rate hikes are expected in the US, the BoJ is in standby mode, applying the yield control curve.
Treasury bonds continue to slide. The 10-year rate yields 2.90%, and the 30-year rate 2.97%, both in the area of ​​maximums in years. What happens with the bonds reflects the expectations regarding the Fed.
In Japan more and more voices are heard warning about the rapid depreciation of the yen against the dollar. So far, the comments have had no impact.
The USD/JPY technical indicators They show overbought levels and have been rising for several weeks, but although a correction would be normal, there are still no signs of it, not even a consolidation. The next significant resistance is seen at 130.00. To the downside, now the supports are 127.75, 126.95 and 126.70.
The economic calendar is light for Tuesday and also for the rest of the week. In a few hours in the US, the report on housing starts and construction permits for March will be known. In addition, Charles Evans, president of the Chicago Fed, will speak publicly at the Economic Club of New York. The data of the week will be the services PMI and ISM. In Japan, inflation figures will be published on Friday.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
