USD/JPY Price Analysis: Sour Treasury Yields Enticing Bears

USD/JPY Price Analysis: Sour Treasury Yields Enticing Bears

Time Stamp: July 12, 2023 4:26 AM
Source Node: 2168295
  • The dollar sunk to a two-month low as the market awaited a US inflation report.
  • The yen surpassed 140 to the dollar for the first time in a month.
  • There are expectations that the BOJ might adjust its yield curve control (YCC) policy. 

Today’s USD/JPY price analysis is bearish. On Wednesday, markets witnessed the dollar sinking to a two-month low as the market awaited a US inflation report. Meanwhile, the yen experienced a surge, reaching a one-month high and surpassing 140 to the dollar for the first time in a month.

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Investors are eagerly awaiting the upcoming US inflation data, scheduled for release later on Wednesday. Moreover, they expect core consumer prices to have risen by 5% annually in June. Additionally, investors will seek further insights into the progress made by the Federal Reserve in addressing inflation concerns. 

Before the report, the US dollar extended its losses from the beginning of the week, hitting a two-month low of 101.34 against a basket of currencies. This decline was a continuation of the downward trend following comments by Fed officials. Notably, they indicated that the central bank was approaching the conclusion of its monetary policy tightening cycle.

Meanwhile, US Treasury yields faced downward pressure, resulting in the two-year and benchmark 10-year yields settling below 5% and 4%, respectively. This decline in Treasury yields offered some relief for the yen, as the dollar/yen pair is sensitive to US yields. 

The yen appears to be on track for its fifth consecutive session of gains, marking its longest winning streak in around seven months. Moreover, analysts noted that the Japanese currency received support from expectations that the BOJ might adjust its yield curve control policy during its meeting.

USD/JPY key events today

It’s a big day for USD/JPY traders as they expect the release of US inflation data. The inflation report will greatly impact the Fed’s interest rate outlook, likely resulting in volatility.

USD/JPY technical price analysis: Bears surpass the key 140.00 level.

USD/JPY technical price analysis
USD/JPY 4-hour chart

USD/JPY continues to make impressive downward moves on the 4-hour chart. The price recently broke below the key 140.00 support level without pausing. This shows the strength of the current move. 

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There is no doubt that the bias is bearish as the price sits far below the 30-SMA with the RSI in the oversold region. Therefore, bears will soon be charging for the next support level at 139.01.

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