The yen extends its fall as yields climb higher

The story in yen pairs now is arguably more about yields than the exuberance in equities but the more positive risk mood certainly isn't helping the Japanese currency.

While US markets are closed today, Treasury yields clipped some key levels at the end of last week with 10-year yields above 1.20% and 30-year yields above 2.00%.

That sentiment is reverberating across other bond markets with German 10-year bund yields rising to its highest since early September last year today:


All of this is putting added pressure on the yen, with USD/JPY now rising to 105.39 on the day despite the greenback keeping more subdued as well across the board.

USD/JPY D1 15-02

Buyers now look set to be testing resistance from the 200-day moving average (blue line) @ 105.52 and that will be a key point to watch in trading this week.

The level helped to cap gains early last week with yields tracking lower after but a further doubling down in the reflation narrative this week could see that resistance point give way and pave the way higher for USD/JPY in the coming days/weeks.

Elsewhere, AUD/JPY is also trading up 0.6% to 81.95 currently as buyers look towards the 13 December 2018 high @ 82.21 - reaffirming the risk-on narrative in the market.