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  • USD/JPY retreats modestly after reaching a one-week high at 106.10
  • Japanese yen among worst performer on US yields and risk appetite.

US dollar trims gains versus G10 currencies as the decline in Treasuries moderates.

The USD/JPY is having the best day in a week amid rising US yields. The pair climbed to 106.10, hitting a one-week high before pulling back to the 105.90 area. The DXY turned positive and climbed to 90.40 and now stands at 90.25.

The dollar gained momentum after US yields jumped to fresh monthly highs. The 10-year peaked at 1.429%, the highest in a year and then retreat to 1.379%. in Wall Street, equity prices erased losses and now main stock indices are higher. The Dow Jones rises by 0.75% and the Nasdaq 0.32%.

The improvement in risk sentiment weighed on the Japanese yen, limiting the retreat of the USD/JPY. Gold (highly correlated with yields) rose $20 from the bottom, rising back above $1800, erasing most of the day’s losses.

USD/JPY upside bias reaffirmed but…

The rebound from the 20-day moving average (105.10) in USD/JPY reaffirmed the current bullish bias. Still, the pair continues to be unable to consolidate above the 106.00 line. If it managed to post a daily close well above, it would likely open the doors to more gains.

On the flip side, 105.65/70 is again a support level to consider, followed by 105.40. A daily close under 104.90 would deteriorate the outlook for the dollar.

Technical levels

 

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