Japanese Yen Dips as Treasury Yields Climb Forward of Ueda Testimony. Greater USD/JPY?

Japanese Yen, USD/JPY, US Dollar, Fed, Yields, BoJ, Ueda, Momentum – Talking Points

• The Japanese Yen has slipped right this moment as markets take inventory of Fed feedback
• A brand new BoJ Governor will converse later this week with all eyes on any coverage tilt
• The technical would possibly see some sideways value motion. Will USD/JPY development resume?

The Japanese Yen is barely weaker to begin the week with the US Dollar firming throughout the board.

The notion that the Federal Reserve would possibly transfer towards 50 foundation level (bp) hikes somewhat than 25 bp seems to be weighing on markets.

Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard each indicated that they might take into account a 50 bp carry of the Fed funds goal price on the assembly in late March.

Although Treasury yields dipped barely on Friday, they completed final week notably greater.

The benchmark 10-year notice is buying and selling again above 3.80% on the identical time that the 10-year Japanese Government Bond (JGB) stays anchored at 0.50% because of the Bank of Japan (BoJ) exercising Yield Curve Control (YCC).

The query lingers of the place the BoJ financial coverage headed after the appointment of Kazuo Ueda to be the brand new Governor of the Bank of Japan (BoJ). He replaces Haruhiko Kuroda, and he’ll seem earlier than the Diet (Japanese authorities decrease home) this Friday.

If the coverage is overhauled, it may need important ramifications for USD/JPY with the connection to yields being obvious within the chart under.

If Japanese yields begin heading north, it may have a substantial influence on the alternate price.

USD/JPY, US-JAPAN 10-YEAR YIELDS

Chart created in Buying and sellingView

USD/JPY TECHNICAL ANALYSIS

USD/JPY traded above the higher band of the 21-day Simple Moving Average (SMA) based mostly Bollinger Band final week after which closed again inside. This would possibly point out a pause within the rally or a possible reversal.

The move-up tried to interrupt above two breakpoint resistance ranges at 134.50 and 134.77 however was unable to carry the excessive floor after making a peak of 135.12. These ranges could present resistance.

Further up, resistance may very well be within the 136.80 – 137.67 space with a breakpoint, prior excessive and the 100- and 200-day SMAs on this zone.

There seem like blended momentum indicators for now with the worth above the 10-, 21-, 55 and 260-day SMAs however under the 100- and 200-day SMAs. This would possibly sign a spread buying and selling atmosphere till there’s a clear break above or under all interval SMAs.

On the draw back, help could lie on the breakpoints and former lows of 133.31, 132.55, 131.58, 131.51, 130.57 and 129.80.

Chart created in Buying and sellingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel by way of @DanMcCathyFX on Twitter