USD/JPY analysis: holding at highs, 111.60 at sight

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USD/JPY Current price: 110.37

  • Japan preliminary Q1 GDP expected to show no economic growth in the three months to March.
  • US Treasury yields’ rally underpinned USD/JPY, now nearing February’s monthly high.

Soaring US Treasury yields sent the USD/JPY pair to its highest since last February, at 110.45, holding nearby by the end of the day. US government bond yields rallied ahead of the US opening, and kept advancing all through the day, with the yield on the benchmark 10-year Treasury note reaching 3.08%, its highest since 2011, and the 2-year yield hitting 2.58%, its highest since 2008. The advance was backed by rising odds that the US Federal Reserve will end up this 2018 with four rate hikes achieved. Data coming from Japan didn’t help, as the Tertiary Industry Index for April came even worse-than-expected at -0.3%. The country will release its preliminary Q1 GDP during the upcoming Asian session, expected to show no economic growth in the three months to March, which should add pressure on the yen. Technically, the 4 hours chart shows that technical indicators lost upward momentum at overbought levels, as the price is firmly above bullish moving averages and away from the daily ascendant trend line coming from early April. Furthermore, the pair is a few pips above its 200 DMA for the first time since early January. 110.47, February’s high is the immediate resistance with a break above it favoring a continuation up to the 111.20/60 region.

Support levels: 110.00 109.60 109.25

Resistance levels: 110.45 110.90 111.20