USD/JPY runs back the other way, buyers back in near-term control

The pair is now back up to around 155.50 on the day, higher by 0.5%. It comes as the push and pull continues, after the fall yesterday was arguably stirred by geopolitical headlines triggering some risk aversion in broader markets. Treasury yields were pulled lower then but are now recovering, helping to underpin the bounce in USD/JPY as well.

10-year yields are now back up to 4.418%, after having been down to a low of around 4.339% yesterday. So, that is helping to amplify the recovery in USD/JPY. Of note, the pair is now managing to nudge back up above its 100-hour moving average (red line). That has proved to be a bit of a line in the sand earlier this week.

As such, in keeping above both that and the 200-hour moving average (blue line), the near-term bias in the pair is now more bullish. But this just takes us back to levels seen last week.

Broader dollar sentiment is still looking fairly tentative, so that makes it a tougher argument to say that we’ve returned to a strong bullish tilt for USD/JPY. There’s still a good push and pull feel this week regarding the post-election sentiment. So, I’d look to that first for any clues in identifying the potential for USD/JPY to carry on with its upside break since September. And that includes how the bond market will fare during the week of course.

This article was written by Justin Low at www.forexlive.com.