Wednesday, February 21, 2018
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USD/JPY struggles to keep 111 handle, despite higher T-yields
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  • Underpinned by higher Treasury yields.
  • BoJ leaves JGB buys unchanged today.
  • Focus shifts to the US data.

The USD/JPY pair continues to find support near 110.85 region, although the upside attempts struggle near 111 handle, as persistent broad USD weakness continue to negate the impact of rising Treasury yields.

USD/JPY: Bearish bias still intact?

The recovery in the spot fuelled by a sharp rally seen in Treasury yields lost steam in Asia, with the bears back in control amid a sudden drop witnessed in oil prices, which spooked the sentiment across the Asian markets, thereby keeping the demand for the safe-haven Yen somewhat underpinned.

However, the downside appears cushioned amid ongoing strength in the US rates on the back of the reports that the US House passed the government stopgap funding bill, while rising expectations of a March rate hike also boosted Treasury yields across the curve, with the 10-year yields having risen to the highest levels since Dec 2016 at 2.637%.

Moreover, the BoJ kept the amounts of JGB purchases unchanged today, which added to the latest leg lower in the Yen. Looking ahead, the pair will get influenced by the Treasury yields price-action and risk trends ahead of the US prelim consumer sentiment data.

USD/JPY Technical View

Jim Langlands at FX Charts, explained: “US$Jpy has chopped around either side of 111.00 for much of Thursday, and more of the same looks likely until the US session.

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