Technical Analysis

USD/JPY comes under pressure, falls to session low ahead of US trading

USD/JPY dips to a low of 114.07


For much of September and up until yesterday, the pair has been underpinned by higher Treasury yields. And when yields are breaking out today, yet the pair is falling. So, what gives?

There are a couple of things working against a move higher in USD/JPY today. Firstly, it’s that higher yields have sparked worries in the equities market and fears/losses in that space has translated into a stronger yen. E-minis are down by 0.4% ahead of the cash equity market open at the moment.

But the third factor that is surreptitiously weighing on the pair is the fact that the BOJ is seen to be comfortable with Japanese bond yields rising further. It’s not something quantifiable by any metrics but the very notion of it is enough to help alleviate some pressure off the yen as investors/insurers will mull over shifting funds back into Japan if yields start climbing high enough.

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