USD / JPY Prepares For Yearly High Near 111.00 Following Rebound In US Treasury Yields


  • USD / JPY shows three day bullish trend as bulls attack April high.
  • Market sentiment fades after Fed’s Powell defends easy money, US-China feuds escalate.
  • BOJ minutes cite lack of agreement on economic outlook Kuroda has met with PM.
  • US PMIs, Fedspeak will be the key along with the risk catalysts.

USD / JPY depicts a broad rally in the US dollar while refreshing two-month high with 110.85, up 0.16% during the day as European traders brace for the trading bell . The major currency pair has recently benefited from the market reassessment of risk catalysts, not to mention mixed updates from the Bank of Japan (BOJ) and data from Tokyo.

Japan’s leading economic index for April topped the forecast of 103.00 and before 103.80, but the BOJ minutes, released earlier in Asia, show differences between policymakers on economic growth. Additionally, Jibun Bank’s preliminary manufacturing PMI reading for June, 51.5 vs. 52.3 market consensus, also weakened the Japanese yen, in turn favoring USD / JPY buyers.

It should be noted that the meeting of BOJ Governor Haruhiko Kuroda with Prime Minister Yoshihide Suga raised doubts about economic strength, even though the BOJ boss dismissed such concerns or demands from the government.

Importantly, a rebound in US Treasury yields thanks to the defensive play of Fed Chairman Jerome Powell during yesterday’s testimony favors USD / JPY bulls. That said, equity futures are also lightly offered but lack direction ahead of key US PMI numbers. Although the forecast suggests weak numbers, bond bears are waiting for softer results to keep USD / JPY in the spotlight.

Technical analysis

A two month old ascending trend channel keeps USD / JPY buyers bullish until the quote stays above 109.60. However, the 111.00 threshold becomes the hard nut to crack on the way north until March 2020, near 111.70.

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