The bond market was the one dictating the mood among major currencies at the end of last week. And that narrative is continuing today as well. USD/JPY caught a strong bounce on Friday towards 140.00 and is building on that, climbing another 0.3% to 140.39 at the moment:

USD/JPY vs US Treasury 10-year yields (%)

This comes as Treasury yields are moving higher again, with 10-year yields up 4.4 bps to 3.737% on the day. This builds on the momentum from late last week and we can see how that has shifted the curve in Fed funds futures from Friday (before the US jobs report) to today:


And when you compare it to four weeks ago i.e. 11 May, you can see how the market thinking has shifted considerably. And that has been a pivotal factor in driving dollar gains over the past few weeks.

For today, it's mainly a continuation to what we saw from Friday. It seems like even with all the "skip" talk by the Fed, traders are believing that they will stick to the higher for longer narrative.

EUR/USD is down 0.2% to 1.0685 and GBP/USD down 0.4% to 1.2400 currently, with AUD/USD also seen down 0.3% to 0.6590 on the day.