USD/JPY Back Sub 148.00 As US Yield Rise Falters

USD/JPY faltered through NY trade on Tuesday. From highs around 148.80/85, we slipped back under 148.00. We track near 147.90 in early Wednesday dealings. The yen up around 0.50% for Tuesday's session, amid generally a softer USD backdrop. JPY was the fourth best performer in the G10 space, trailing AUD, SEK & NOK.

• Despite Tuesday's late pullback, the broader technical picture is unchanged. We need to sustain a break above 148.80 to open up a 149.16 a Fibonacci retracement, beyond that lies 149.75, the Nov 22 high. The 20-day EMA sits at 146.99, while the Feb 1 at 145.90 is seen as key support.
• USD/JPY followed the direction of US yields through the US session, with weakness across the benchmarks. The 10yr is back to 4.09%, off around 7bps, with similar losses across most other parts of the curve. US-JP 10yr yield differentials are off recent highs, unable to breach +350bps, with recent lows around +319bps.
• Fed speak was consistent with Powell's recent messaging. US yield momentum waning after very strong cumulative gains through Fri/Mon trade.
• On the data calendar today we have the Dec preliminary leading and coincident indices. These shouldn't move market sentiment.
• Finally, note the option expiries for NY cut later: Y146.40-55($2.0bln), Y147.00($1.5bln), Y147.45-60($889mln), Y148.00($710mln).