USD/JPY PRICE OUTLOOK: US DOLLAR SUPPORTED BY SURGING TREASURY YIELDS, MULTI-YEAR TRENDLINE IN FOCUS AHEAD OF BOJ ANNOUNCEMENTUS
USD/JPY PRICE OUTLOOK: US DOLLAR SUPPORTED BY SURGING TREASURY YIELDS, MULTI-YEAR TRENDLINE IN FOCUS AHEAD OF BOJ ANNOUNCEMENT
- US Greenback strengthened broadly on Thursday and erased losses from the prior session
- Treasury yields exploded increased with the ten-year piercing 1.75% regardless of a dovish Fed
- USD/JPY worth motion contends with a vital technical stage forward of the BoJ resolution
A number of merchants had been caught offside on Thursday because the US Greenback whipsawed again increased alongside surging Treasury yields. The ten-year Treasury yield, for instance, briefly spiked above 1.75% intraday and offered a significant increase to US rate of interest differentials. This helped the broader DXY Index reverse prior session losses sparked by one other dovish FOMC replace.
USD/JPY was little modified, nevertheless, because the main foreign money pair stagnates at an enormous stage of resistance across the 109.00-handle. The Greenback-Yen has began to lack route with shopping for pressures clashing with a multi-year bearish trendline. This negatively sloped trendline extends by way of the June 2015, August 2015, and February 2020 swing highs.
USD/JPY PRICE CHART: MONTHLY TIME FRAME (FEB 2014 TO MAR 2021)
USD/JPY worth motion additionally contends with technical resistance posed by the 38.2% Fibonacci retracement stage highlighted on the chart above. Honing in on a shorter time-frame with each day candlesticks, we will see how nicely the Greenback-Yen is respecting this bearish trendline as extra decrease highs start to kind. Although there might be potential for an overshoot above this impediment close to the 109.00-price stage, notably in mild of surging Treasury yields, the higher Bollinger Band would possibly reject makes an attempt to push increased and trigger USD/JPY to pivot again decrease.
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USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (OVERNIGHT)
Trying to the DailyFX Financial Calendar, we discover that high-impact occasion threat posed by the upcoming Financial institution of Japan fee resolution is on faucet for Friday’s buying and selling session. USD/JPY in a single day implied volatility seems comparatively subdued, nevertheless, contemplating that the Financial institution of Japan is predicted to launch findings from their newest financial coverage evaluate. If tweaks are made to BoJ financial coverage, akin to widening its YCC band, it might catalyze some critical volatility within the Yen and probably ship USD/JPY snapping decrease.
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— Written by Wealthy Dvorak, Analyst for DailyFX.com
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