USD/JPY climbs to fresh multi-month highs above 107.80 on surging US T-bond yields

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  • USD/JPY rose to its highest level since July 2020.
  • 10-year US Treasury bond yield is up more than 3%.
  • US Dollar Index is posting strong gains above 91.50.

The USD/JPY pair extended its daily rally during the American trading hours and touched its highest level since July at 107.88. As of writing, the pair was up 0.82% on the day at 107.86.

Powell downplays bond market worries

A sharp upsurge witnessed in the US Treasury bond yields allowed the USD to gather strength against its major rivals.

While speaking at the Wall Street Journal Jobs Summit on Thursday, FOMC Chairman Jerome Powell repeated that the current monetary policy setting is appropriate. When asked about rising T-bond yields, Powell made a blanket statement and said that they would be concerned “by a persistent tightening of financial conditions broadly.”

Powell Quick Analysis: Markets set to suffer for two more weeks as Fed mostly dismissed bond rout.

Fueled by these comments, the benchmark 10-year US T-bond yield made a sharp U-turn and was last seen gaining 3.4% on the day at 1.536%. In the meantime, the US Dollar Index climbed to its highest level since early February above 91.50.

There won’t be any significant macroeconomic data releases from Japan during the Asian session on Friday and investors will remain focused on T-bond yields until the US Bureau of Labor Statistics publishes the February Nonfarm Payrolls (NFP) report.

Technical levels to watch for

 

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