- The US dollar rises across the board in US time.
- USD/JPY is headed for the highest daily close in years.
The USD/JPY It broke higher during the US session amid rising US yields. After trading for hours around 125.35, the pair gained momentum and hit a fresh daily high at 126.00. At time of writing, it hovers around 125.85/90 and could post the highest daily close since 2002.
Higher US yields help make the dollar stronger across the board. The US 10-year yield rose to 2.79% and the 30-year yield jumped from 2.81% to 2.89%, the highest level since 2019. At the same time, DXY also hit multi-year highs above 100.50.
US economic data was mixed. Retail sales rose 0.5% in March after a positive revision to February’s figures. Initial jobless claims rose to a five-week high of 185,000. The preliminary reading of the University of Michigan Consumer Confidence Index improved against expectations to 65.7 in April.
recovery continues
The outlook for USD/JPY remains positive thanks to the divergence between the Fed and the Bank of Japan. Since early March it gained 1000 pips and is starting to consolidate above a long-term resistance area seen around 125.00.
The main risk to the bullish outlook is market sentiment. A deterioration could lead to heavy losses in equity markets boosting Treasuries, which should weaken USD/JPY.
Technical levels
Source: Fx Street
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