USD/JPY renews one-year highs above 110.30 fueled by surging US T-bond yields

• USD/JPY continues to push higher ahead of the American session.
• 10-year US Treasury bond yield is up more than 3%.
• US Dollar Index climbs to multi-month highs beyond 93.00.

The USD/JPY pair closed in the positive territory for the fourth straight day on Monday and extended its rally to a fresh yearly high of 110.39 on Tuesday. As of writing, the pair was up 0.52% on the day at 110.35.

DXY preserves its bullish momentum

The sharp upsurge witnessed in US Treasury bond yields seems to be providing a boost to positively-correlated USD/JPY. The benchmark 10-year US Treasury bond yield, which touched its highest level in nearly 15 months at 1.774%, is currently rising 3% at 1.763%

Consequently, the USD continues to outperform its rivals with the US Dollar Index (DXY) advancing to its strongest level since early November at 93.20.

Meanwhile, the S&P 500 Futures are down 0.3% on the day, suggesting that USD/JPY’s upside could remain limited if investors adopt a cautious tone in the second half of the day.

The data from Japan showed on Tuesday that Retail Trade in February contracted by 1.5% on a yearly basis and the Unemployment Rate remained steady at 2.9%, compared to analysts’ estimate of 3%. None of these figures triggered a meaningful market reaction.

The US economic docket will feature the Conference Board Consumer Sentiment Index later in the session. Furthermore,  Federal Reserve’s Vice Chairman for Supervision, Randal Quarles, and Federal Reserve Bank of New York President John Williams are both scheduled to deliver speeches.

Technical levels to watch for