USD / JPY pulls back from 115.00 amid sideways yields, USD bulls take a breather

• USD / JPY dips from yearly highs near 115.00 as the USD bulls take a breather.
• Money market futures have been fully discounted by a 25 basis point rate hike from the Fed for July 2022.
• Yields on 10-year US Treasuries and the US dollar remain sideways in the session, strengthening the Japanese yen.

The USD/JPY it struggles with the 115.00 level, losing 0.24%, trading at 114.55 during the American session at the time of writing. As for sentiment, the market is mixed, as European stocks fluctuate between gains and losses.

USD / JPY attempted an attack towards 115.00. However, it did not have the strength to overcome a strong resistance, so it fell back towards Wednesday’s daily pivot point at 114.57, where it encountered some buying pressure, jumping towards the 114.70 zone.

US Dollar Index Steady Around 95.90, USD Bulls Prepare Attack Toward 96.00

Meanwhile, money market futures have been fully discounted in a 25 basis point rate hike by the US central bank for July 2022, a month after the Federal Reserve stopped buying assets. . After a 30-year rally in the US CPI, investors seem convinced that the Federal Reserve will have to act quickly to curb the price rise, mirroring it, in the bond market. Additionally, the US 10-year yield is up one basis point, standing at 1.64%, acting as a headwind for USD / JPY.

The US dollar index, which measures the dollar’s performance against a basket of its peers, is sideways on the day at 95.90, supported by US 10-year yields.

Leaving this aside, on the macroeconomic front, the Japanese economic agenda showed that export growth slows to an 8-month low, as demand for automobiles slows as global supply constraints hit Japanese manufacturers. According to sources cited by Reuters, “while automakers are planning a ‘payback production’ in November and December, the clouds still hang over the ground: the semiconductor shortage will last at least until the end of the year, and nobody knows. if plans by automakers to avoid the impact of shortages chips by adjusting their supply chains would be successful. “

On the US economic agenda, the housing data was mixed, although it appears investors are ignoring it. Building permits for October rose to 1.65 million, above the 1.638 million expected by analysts. On the contrary, housing starts for the same period slowed down to 1.52 million, below the expected 1.576 million.

Therefore, USD / JPY is supported by the dynamics of US bond yields, which act as a tailwind for the pair. If the 10-year yield remains unchanged, that could be positive for the Japanese yen bulls, pushing the pair lower. However, the USD bulls appear to be pausing before launching an attack towards 115.00.

Technical levels