USD/JPY remains bid above 114.00, but 10-yr treasury yield is struggling near 2.4%

The Dollar-Yen pair has regained the bid tone at Tokyo open, currently trading 0.15% higher on the day around 114.20, although caution is advised as the 10-year treasury yield is showing signs of exhaustion near 2.4%. 

The pair retreated from the high of 114.30 during the overnight trade, thus leaving a long upper shadow on Monday’s candle. 

US 10-year yield - bullish move has stalled

The sharp rally from the June 26 low of 2.121% appears to have run out of steam near 2.4%. The first attempt to take out the key level fell apart at 2.391% on July 6. Over the next two days, the yield again failed near 2.4%. The bullish move appears to have stalled after US reported a weaker-than-expected June wage growth numbers on Friday. 

Consequently, the uptick in the USD/JPY pair is being viewed with caution. 

Focus on Fed speak

FOMC member Brainard and Kashkari are scheduled to speak at 16:30 GMT and 17:20 GMT respectively. Kashkari, a well known dove, is likely to call for a slower path of policy tightening. Meanwhile, Brainard is more likely to support gradual tightening and balance sheet normalization. 

USD/JPY Technicals

Valeria Bednarik, chief analyst at FXStreet says, “The 4 hours chart shows that technical indicators have retreated modestly from near overbought readings, lacking anyway bearish strength, whilst the price remains well above bullish 100 and 200 SMAs, with the shortest accelerating above the largest. The pair needs to advance beyond 114.40 to be able to extend its gains, up to 115.10 as an initial bullish target.”

The immediate resistance is seen at 114.36 (May high), which if breached would expose 115.00 (zero levels) and 115.50 (Mar 10 high). On the downside, failure to hold above the session low of 114.01 would open up downside towards 113.72 (5-DMA) and 113.21 (10-DMA). 

Both 5-DMA and 10-DMA are sloping upwards suggesting the dips could be met with fresh bids. The daily RSI is now overbought.