USD/JPY attempts a test of the 100-hour MA
10-year Treasury yields are virtually flat now at 3.048% recovering from the lows posted earlier on the back of Italian budget worries of 3.028%. The rebound in yields has seen yen pairs pare some of their earlier losses as well and notably USD/JPY has climbed back up now to 112.78 from a low of 112.56 earlier in the day.
Of note, the pair is now testing a move to break above the 100-hour MA (red line) @ 112.76. Hold a break above and the near-term bias turns more bullish. Meanwhile, stay below that and price bias remains undefined as it is trapped between the 100-hour MA and the 200-hour MA (blue line) @ 112.50.
The recent upwards trendline was broken in overnight trading following the Fed's decision and the decline in yields but there are mild hints of a recovery in trading today. There was a brief spike in Asian trading to move above the 100-hour MA but ultimately that failed and buyers are now giving it a second go.
The Italian budget situation is still far from being resolved and looks like it will drag on for quite some time. The budget meeting is only set to take place at 1800 GMT. In the meantime, markets do look a bit jittery but the recovery in Treasury yields may help to offset some of those early nerves as we move into US trading.
Apart from the yen, the move higher in yields hasn't translated to anything more in the currencies space but be on the look out just in case the tide starts to turn. Of note, E-minis have pared their earlier losses too:
That could be a signal for a return back to risk (or at least some of it) ahead of more Italian budget headlines to come in the day.
