- USD / JPY is consolidating around 109.75, just below multi-month highs recently touched at 109.85.
- This week’s key data from both the US and Japan will come into focus this week.
The USD/JPY It is consolidating around 109.75, just below the multi-month highs recently touched at 109.80 touched last Friday. The pair found decent resistance at 109.35, with traders clearly eager to buy on the dips, as USD / JPY pulled back to support in the form of the prior month’s highs in this area. This technical price action is a bullish signal and increases the likelihood of USD / JPY moving towards new multi-month highs and perhaps even breaking above the 110.00 level in the coming sessions, allowing for rebalancing flow volatility. end of quarter.
Performance of the day
Despite the lack of new fundamental catalysts, US government bond yields have rebounded since US players hit the market on Monday, with the 10-year yield rising from about 1.65% to current levels. close to 1.69%, a 3 basis point rally on the day. This means that the 10-year bond interest rate spread between the US and Japan has once again exceeded 160 bp; the higher this rate differential, the more optimistic the USD / JPY will be, although it would be especially useful if the rise in US government bond yields were driven by a rise in real yields, which in some cases This was the case this Monday (yields on the 10-year TIPS rose 2 bp in the session to -0.66%).
A breakout to new yearly highs this Monday seems unlikely given the calm market conditions, but there is likely a lot of action later in the week. On Wednesday, the US ADP national employment data for the month of March is scheduled for release, proceeding with the March ISM US manufacturing survey and the US jobs report. Data could trigger significant USD / JPY volatility, but Friday is where things get really interesting. Since it is Good Friday (a holiday in most of the Christian world, that is, America and Europe), the volumes of currencies will be very scarce, while the equity and bond markets will be closed. Therefore, the price action could go wild.
Many market participants could look to close their positions before Friday, which means that Thursday could see unusually oscillating price action. Keep in mind that there is also a lot of important data from Japan this week that could trigger some volatility; February labor market and retail sales data will be released on Tuesday, February industrial production on Wednesday, and then Tankan’s first-quarter business survey on Thursday.
Technical levels
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