USD / JPY jumps to the 109.80 zone before yields fall and the dollar rises

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  • The dollar soars after US data and rises on all fronts.
  • The yen loses strength due to a rise in Treasury yields.

The USD / JPY is erasing Wednesday’s losses and has just climbed to 109.82, before retreating towards 109.60. The impetus came from a rise in the dollar throughout the entire market and from the fall in the value of Treasury bonds.

Retail sales data and the Philly Fed surprised positively, adding to what happened on Wednesday with the Empire. This pushed up Treasury bond yields, with the 10-year rate reaching 1.35%; which weakens the yen.

Short-term outlook

The USD / JPY rally comes after Wednesday’s sharp decline, which had pushed the price below key support at 109.60. On Thursday the pair is returning above which may imply a reversal back to the previous range.

Should it retrace and affirm clearly below 109.50, the bias could continue to point to the downside, with key support being next at 109.00 / 05. Conversely, a return above 109.90, where the 20-day moving average is, would negate the recent strength of the yen. Higher up, a daily close above 110.20, would enable more raises.

Technical levels

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