- Yen slumps across the market on USD/JPY rally.
- The dollar at the highest since 1998 against the Japanese currency.
- Divergence in the monetary policy of the BoJ and the Fed, key for the pair.
The USD/JPY started the day trading in the 135.00 area and in the European session it began to accelerate the raises, breaking the 136.00 area on the way. The pair reached as high as 136.33, a level not seen since 1998. Then it pulled back, holding above 136.00.
The rises occur despite the fact that the dollar is with mixed results in the market. While Treasury yields are rising, they are doing so very gradually and are far from current cycle highs. The 10-year tranche is at 3.30% and the 30-year tranche at 3.37%. The bond market remains a key focus. On Wednesday, the president of the Federal Reserve.
The rises in the USD/JPY are mainly supported by the contrast between the Fed’s policies and the Bank of Japan (Boxwood). While the BoJ continues with its very accommodative policy and control of bond yields, the Fed had the highest rate hike since 1994 last week and it is estimated that they will continue to rise.
If sustained above 136.00, the pair’s advance could continue in the very short term. The break of 136.35 will set the sights on 136.50. In the opposite direction, below 136.00, next support is seen at 135.50/60, which if given could lead to a further correction, with next strong support at 134.60.
Technical levels
Source: Fx Street
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