USD/JPY retreats from session highs, focus is on the 10-year treasury yield

• USD/JPY has pulled back more than 20 pips from the session high of 109.77, possibly tracking the moderate losses in the 10-year treasury yield.
• The 20-day correlation between the USD/JPY pair and the 10-year treasury yield is strongest since September 2017.

The USD/JPY pair is currently trading at 108.56, having clocked a high of 108.77 earlier today.

Notably, the pair has pulled back from the session highs, despite the positive action in the US stock index futures. As of writing, the S&P 500 futures are currently reporting a 6 point or 0.25 percent gain.

USD/JPY’s inability to retain the bid tone amid risk-on in the equities could be associated with the moderate losses in the US 10-year treasury yield. The benchmark yield printed a low of 2.68 percent soon before press time – down two basis points from the overnight high of 2.7 percent.

It is worth noting that the 20-day correlation coefficient between the USD/JPY pair and the 10-year treasury yield currently stands at 0.96 – the highest level since September 2017.

The focus, therefore, is on the treasury yields.

USD/JPY Technical Levels