USD/JPY Forex Technical Analysis – Boosted by Rise in Treasury Yields as Growth Fears Ease

The Dollar/Yen is moving back toward a 24-year high on Tuesday on the back of a rise in U.S. Treasury yields. The Forex pair is gaining support from a strong rebound in the 10-year Treasury yield, which jumped as high as 2.978% in Tokyo earlier in the session from its lowest level since May at 2.791% on Friday.

At 07:11 GMT, the USD/JPY is trading 136.241, up 0.539 or +0.40%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $69.24, up $0.27 or +0.38%.

The USD/JPY was pressured last week after the ISM manufacturing index came in slightly below estimates. That data came in a day after the government reported that the core personal consumption expenditures price index, the Fed’s preferred inflation measure, rose 4.7% in May, slightly below the 4.8% forecast.

Today, safe-haven demand for Treasury bonds and the Japanese Yen are easing as risk sentiment improved slightly amid easing growth fears.

Looking ahead to the rest of the week, investors will get the opportunity to react to the publication of minutes from last month’s Fed meeting on Wednesday, and U.S. employment data on Friday.

The USD/JPY could fall sharply on Friday if the jobs data comes in considerably below expectations.

Short-Term Outlook

Trader reaction to the minor pivot at 135.877 is likely to determine the direction of the USD/JPY on Tuesday.

Bullish Scenario

A sustained move over 135.877 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into the 20-year high at 137.003. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 135.877 will signal the presence of sellers. If this move creates enough downside momentum then look for a pullback into the minor bottom at 134.750.

Taking out 134.750 will change the minor trend to down. This will shift momentum to the downside with the short-term retracement zone at 134.249 to 133.599 the next important target zone.

The short-term Fibonacci level at 133.599 is a potential trigger point for an acceleration to the downside.