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USD / JPY retreats from seven-month highs below 107.00

  • Rising treasury yields trigger volatility in metals and stocks, and the exchange rate remains stable.
  • The yen is mixed across the board, recovering against the US dollar, losing momentum against other G10 currencies.

The USD/JPY It peaked Wednesday at 107.14, the highest level since July last year, driven by a stronger US dollar and rising Treasury yields. The pair failed to stay above 107.00 and fell back to 106.85 as the bond market movement slowed.

Attention: Tension in the bond market

On Wall Street, US stocks are mostly lower, with the Nasdaq falling 0.79%, below lows after a recent rally, the Dow Jones is up 0.31%. The VIX jumped to three-day highs and is now in neutral territory. The DXY is flat too, around 90.80 after hitting 91.05.

On Wednesday, economic data showed that private payroll measured by ADP increased 117,000 in February, below the 177,000 of the market consensus. The ISM services sector unexpectedly fell to 55.3 in February, while the final reading of the IHS Markit service rose revised to 59.8 from the original reading of 58.9. Later, the Federal Reserve will release the Beige Book. On Thursday the data of the unemployment applications expire and on Friday the official employment report.

Movements in the bond market offset the economic data. The US 10-year yield rose to 1.49% before falling to 1.47%. The recovery in Treasuries pushed USD / JPY lower.

At the moment, the pair is at 106.85, below the highs after making a modest reversal. The uptrend remains intact, but the failure at 107.00 could suggest some consolidation during the next few sessions. Immediate support is at 106.65, followed by 106.45.

Technical levels

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