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USD/JPY at New Post-Intervention Highs as Yields Extend Gains

JPY
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  • Renewed run higher in the US 10y yield is making itself known in currency space, with USD gains pushing USD/JPY to fresh post-intervention highs. Pressure here is keeping the spot JPY trade-weighted index on course for a test of the YTD lows - just ~1% below the current price.
  • This leaves 158.21 as the next resistance, marking the 76.4% retracement for the intervention leg off the 160.17 multi-year high. Markets may be on watch for any commentary from Japanese authorities overnight, who are likely to stress their intent to act against 'excessive' market moves.
  • What the authorities may be wary of, however, is that while USD/JPY is rallying, JPY remains generally firmer on the day - which could counter pressure to act: EUR/JPY, AUD/JPY, CAD/JPY and others are lower on the day.
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  • Renewed run higher in the US 10y yield is making itself known in currency space, with USD gains pushing USD/JPY to fresh post-intervention highs. Pressure here is keeping the spot JPY trade-weighted index on course for a test of the YTD lows - just ~1% below the current price.
  • This leaves 158.21 as the next resistance, marking the 76.4% retracement for the intervention leg off the 160.17 multi-year high. Markets may be on watch for any commentary from Japanese authorities overnight, who are likely to stress their intent to act against 'excessive' market moves.
  • What the authorities may be wary of, however, is that while USD/JPY is rallying, JPY remains generally firmer on the day - which could counter pressure to act: EUR/JPY, AUD/JPY, CAD/JPY and others are lower on the day.