USDJPY traded Monday at its highest level in over 20 years, eliminating the April 28 swing at 131.242. However, the high price was only able to reach 131.342 before reversing lower. Buyers turned to sellers on the failed breakout and the price began a downward rotation.
Meanwhile, yields in the United States also fell. The high yield for the 10-year yield also hit its cycle high on Monday at 3.203%. The yield bottomed yesterday at 2.815%. Today, the yield is at 2.911%. USDJPY price action mimics yield moves (at least for now).
The sequel turned lower, the pair fell yesterday as yields also fell. However, the 127.508 low price stalled ahead of a swing up zone from April 19-27 between 127.337 and 127.434.
Were there any dip shoppers near that area? It seems so.
The corrective move higher from this low saw the pair extend above the 38.2% retracement of the move down this week at 128.973, but below the 50% retracement at 129.425. The high price today reached 129.351.
Technically watch the 128.63 level for support on any downside move today. A move below this level – and staying below this level – would give sellers against today’s 50% midpoint at 129.425 added confidence. Conversely, a move above the 50% retracement 129.425 would cause traders to look lower to the 100 hourly moving average 129.705. The 200 hourly moving average is above this level at 129.93 currently (and moving lower).
In the meantime, keep an eye on US yield trends. Higher yields should drive USDJPY higher. It was the pattern this week.