Yen Surges On Continued Yield Pullback

Yen was the second-best performer in the G10 space for Monday's session. We gained just under +1.4% for the session, which puts USD/JPY back to the 133.20/25 region. The pair did get as low as 132.25/30 in NY trade before some support emerged. The yen continued to benefit from the sharp pull back in core yields, led by the US.

• From highs last week the US 2yr yield is more than 100bps lower to sub 4%. A number of banks now expect no hike from the Fed next week, while Nomura is penciling in a 25bps cut and an end to the Fed's QT.
• The US 10yr yield is off by more than 40bps, but this benchmark edged higher into the NY close (back to 3.57% from lows near 3.40%), which likely helped stabilize USD/JPY sentiment.
• The technicals warn of a deeper correction in the near term now that the 50-day EMA (134.27) has been broken. Lows from Monday at 132.29 will be in focus, beyond that is the 131.31 level, a Fibonacci retracement point from the Jan 18 - Mar 8 rally.
• The local data calendar is empty today.