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USD/JPY Gains Before Bank of Japan as 10-Year Treasury Yield Touches New 2022 High

USD/JPY Gains Before Bank of Japan as 10-Year Treasury Yield Touches New 2022 High

Daniel Dubrovsky, Contributing Senior Strategist


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Japanese Yen, USD/JPY, British Pound, Treasury Yields, Bank of Japan – Asia Pacific Market Open

  • Japanese Yen, British Pound underperform. Canadian and Australian Dollars shine
  • Lack of data due to US holiday placed focus on new 2022 high for 10Y Treasury yield
  • USD/JPY eyeing the Bank of Japan rate decision, but attention seems on external risks
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Monday’s Market Recap – Treasury Yields, China GDP

The Japanese Yen and British Pound were some of the worst-performing G10 currencies on Monday, with the Canadian and Australian Dollar pushing slightly higher against their major peers. Top-tier event risk was China’s fourth-quarter GDP print, which clocked in better than expected across the board. Still, the world’s second-largest economy continue to slow amid local, growth-hampering woes.

US markets were offline for the Martin Luther King Jr. Day holiday, creating relatively illiquid trading conditions. There was also a lack of fresh economic data, placing the focus for markets on broader fundamental themes. This includes global monetary policy tightening, especially from the United States. Last week, US CPI data registered at a 40-year high.

Data from TradingView on the daily chart below showed that the 10-year Treasury yield closed at its highest this year, taking out the 1.75 – 1.77 resistance zone. That has exposed peaks from late 2019, which would be a range between 1.90 and 1.97. Similar data from TradingView also showed the 2-year Treasury yield breaching 1.00%, setting another high this year.

10-Year Treasury Yield – Daily Chart

10-Year Treasury Yield Daily Chart

Chart Created in TradingView

Tuesday’s Asia Pacific Trading Session – Bank of Japan

Asia-Pacific markets appear to be heading for a rather quiet Tuesday. Top-tier event risk will likely be the Bank of Japan interest rate decision. While there is no specific time for the announcement, excluding outliers, it tended to cross the wires around 3:00 GMT since 2020 – see below. The BoJ is widely expected to maintain both the benchmark lending rate and 10-year yield target unchanged at -0.10% and 0.00% respectively.

Yen traders will likely pay more attention to the central bank’s updated growth and inflation projections. Despite these changes, the central bank is widely anticipated to remain dovish relative to its major counterparts. Thus, the focus for the anti-risk JPY will likely remain glued to how other central banks tighten policy and overall market risk appetite. This may leave USD/JPY skewed higher down the road.

Bank of Japan Time Releases

Data pulled from Bloomberg

USD/JPY Technical Analysis – Daily Chart

USD/JPY aimed higher over the past 24 hours as the major pair tested the 50-day Simple Moving Average (SMA). Prices left behind a bullish Morning Star candlestick pattern, which could be a sign of a turning point. Still, further confirmation is needed to shift the near term technical outlook bullish following losses since the beginning of the year. Immediate support seems to be the 23.6% Fibonacci extension at 114.138.

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USD/JPY Technical Analysis Daily Chart

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Strategist for

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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