After hitting above highs of just above 131.00 at the end of April and early May, the pair fell back as bond yields retreated in the past three weeks. It was a much needed breather after a pretty unrelenting push from 116.00 all the way to 130.00 for the pair.
But as bond yields are turning higher this week amid the focus back on inflation, we are seeing USD/JPY track higher as well.
The pair did test waters below support around 126.94-02 last week but buyers are stepping in strongly in the past few sessions to vindicate the dip buying near the 127.00 level.
From a technical perspective, there is little in the way of a push back towards 130.00 for the pair now. That said, the bond market continues to hold the cards here so be wary of movement in that space. For now, Treasury yields are continuing to track higher with 10-year yields up another 2.5 bps to 2.87% on the day.
