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USD/JPY Hits New Weekly Highs As Rising Bond Yields, Consumer Confidence Carry the USD


After a major drop in the last two weeks, the USD/JPY has resumed the upside push following a rise in US bond yields and upbeat Consumer Confidence data. 

Setting the tone for the pair were events from Japan in the Asian session, where the Bank of Japan (BoJ) kept all its policy parameters unchanged. BoJ Governor Haruhiko Kuroda hinted at easing of monetary policy if it became necessary to do so; a JPY-negative dovish tone from the BoJ.

Yields on the 10-year Treasury Note rose for a 3rd straight day, with gains of 1.1% on top of the 2% added in the previous two days. This climb came on the back of weak buying volumes, thus helping the USD/JPY to a 0.5% gain on the day. 

Also helping the USD/JPY on the day were upbeat figures from the Consumer Confidence report, where the index rose from 109.0 in March to 113.1 in April. This jump exceeded the estimate of analysts. 

On the other hand, the Conference Board’s Consumer Confidence Index improved to 121.7 in April. Although this reading beat the market expectation of 113, it failed to trigger a meaningful market reaction. Later in the session, the 7-year US Treasury note auction will be watched closely by market participants. On Wednesday, Retail Trade data will be featured in the Japanese economic docket.

Technical Levels to Watch For

 Today’s upsurge is attempting a break of the supply zone at the 108.468/108.819 area. A rejection at this point allows the pair to tick down towards 107.824, with additional targets lurking at 106.998 and 106.659 (3 March low).

On the flip side, a successful break of the supply zone allows the bulls to aim for the 109.310 resistance (17/18 March high). Above this level, additional targets exist at 109.704 and 110.137.

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USD/JPY Daily Chart

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