USD/JPY refreshes monthly bottom below 109.00 as US Treasury yields recover

• USD/JPY drops for a fifth consecutive day, marks the heaviest weekly fall since early November.
• US-Russia tension escalates, Washington joins hands with Tokyo to discuss China, $2 billion initiative on 5G technology.
• Reuters’ Tankan Survey suggests Japan’s Manufacturer’s Sentiment brightens in April.
• Biden-Suga meet, US Michigan Consumer Sentiment Index will be the key.

USD/JPY stays depressed for the fifth consecutive day despite the latest bounce off intraday low of 108.61, also the lowest in three weeks, on Friday’s Tokyo open. While upbeat Tankan survey data could be cited as a supportive catalyst to the Japanese yen, the recent strength in the US Treasury yields and headlines suggesting US-Japan talks seems to have weighed down the yen pair.

As per the latest Reuters Tankan poll, Sentiment among Japanese manufacturers strengthened to a more than two-year high in April. The data also justifies recently upbeat figures from the Asian major that backs Bank of Japan’s (BOJ) cautious optimism. Even so, the BOJ policymakers stay ready to further ease monetary policy if needed as fears of the coronavirus (COVID-19) resurgence loom over Tokyo.

On the other hand, US President Joe Biden and Japanese Prime Minister Yoshihide Suga as up for a meeting in the White House around 13:30 GMT on Friday. As per the latest update from the US Administration official, conveyed by Reuters, “Biden and Suga to talk in-depth about China.” The official also mentioned that the national leaders will meet one-on-one before their aides join talks. Additionally, chatters surrounding the $2 billion initiative on 5G technology were also loud.

Given the US-China tussle, Washington’s discussion with Tokyo may push Beijing towards re-conveying his anger on American politics. Also likely challenging the previous risk-on mood could be the US sanctions on Russia and Bloomberg’s piece suggesting a longer ban on the Johnson & Johnson vaccine’s usage.

Amid these plays, US 10-year Treasury yields gain four basis points (bps) from the one-month low flashed the previous day whereas Japan’s Nikkei 225 rise 0.21% and S&P 500 Futures struggle for a clear direction near the record top.

Looking forward, the policymakers’ meeting in the US and American consumer sentiment survey data will be important to watch for fresh impulse. However, the key will be the US bond moves.

Read:  US Michigan Consumer Sentiment April Preview: Happiness is on the way

Technical analysis

Although a two-week-old downward sloping trend line near 109.30 guards short-term upside of USD/JPY, the pair sellers need to break an ascending support line from March 10, near 108.55 to take fresh entries.