- Follow the USD/JPY rally at high speed.
- The dollar with mixed results, before rising in stock markets and in yields.
- War in Ukraine continues to generate volatility, to which is added the week of the Fed.
The USD/JPY is rising for the sixth day in a row and shows no signs of slowing down. The pair hit new five-year highs at 108.05, after which it fell back to the 117.80 area.
The pair’s advance is fueled by rising US Treasury yields. The 10-year rate hit its highest in years, momentarily topping 2.10%. Other tranches are also at levels not seen in months or years.
The fall in the value of the bonds occurs in a context of rising equity markets and also prior to the expected first rise in interest rates by the Federal Reserve. The decision will be announced on Wednesday. On Tuesday there will be wholesale inflation data.
The key focus remains the situation in Ukraine. Some previous optimism was overshadowed by the latest statements by Ukrainian officials.
From a technical point of view, the USD/JPY is overbought but shows no signs of correction, nor to be exhausted. Should the rally be extended, there are two major barriers ahead at 118.50 and then at the Jan Dec 2016 highs at 118.65. In other words, if it asserts itself above 118.65/70, the dollar could extend its rises.
Supports from the current level can be seen at 117.60, followed by 117.05 and then 116.35.
Technical levels
Source: Fx Street
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