- The Japanese yen plummets across the board amid risk appetite and rising US yields.
- USD / JPY is about to end the negative streak with a strong reversal.
The USD/JPY bottomed at 107.42 hours ago, reaching the lowest level since March 4. Since then he has gained more than 60 pips. It climbed to 108.14 in a few minutes, taking a sharp turn. At time of writing, it is hovering around 108.00, modestly higher for the day, but now, momentum is pointing to the upside.
Rising US yields triggers the USD / JPY rally. The 10-year yield tested at 1.53%, the weekly low, and then jumped to 1.579%. Economic data from the US contributed to the rebound. New home sales rose more than 20% in March and Markit’s PMI beat expectations in April according to preliminary data, reaching new all-time highs.
Another factor that weakened the yen was risk appetite. US stocks rebounded and turned positive. The Dow Jones is back above 34,000, up 0.60%, while the Nasdaq is up more than 1%.
If the USD / JPY pair can sustain at current levels, it would offer a reversal signal upon recovering 108.00 and the 55-day moving average. The dollar could post its first gains after falling for four consecutive days. Weekly it is still in negative territory, heading for the third consecutive weekly decline.