USD/JPY: Sluggish yields, pre-data anxiety probes buyers at the highest levels since 1990

• USD/JPY grinds higher around intraday top as bulls await fresh catalysts.
• US Treasury yields seesaw around multi-day top, Asia-Pacific equities track Wall Street gains.
• Hopes of stimulus from the UK, China joins Japanese policymakers’ silence on market meddling favor buyers.
• US Retail Sales, Michigan CSI will decorate calendar but risk catalysts appear as the key for clear directions.

USD/JPY seesaws around mid-147.00s as bulls take a breather around the 32-year high heading into Friday’s European session. With this, the yen pair prints an eight-day uptrend even as the sluggish Treasury yields challenge the pair buyers by the press time.

US 10-year Treasury yields keep the late Thursday’s pullback from the highest levels since October 2008 while the two-year and 30-year bond coupons also retreat from the multi-year tops by the press time. That said, the equities in the Asia-Pacific region print gains by the press time.

It’s worth noting, however, that market’s expectations of stimulus from China and the UK, as well as the latest US dollar pullback, seem to challenge the USD/JPY buyers amid inactive trading hours of the day. Further, the market’s cautious mood ahead of the US Retail Sales for September, well as well as the preliminary readings of the Michigan Consumer Sentiment Index (CSI) the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations for October, also weigh on the yen prices.

That said, fears that Japanese policymakers are secretly defending the yen and the Bank of Japan’s (BOJ) rejection of higher rates, as suggested by the International Monetary Fund (IMF), also restrict the USD/JPY pair’s immediate moves.

Looking forward, updates relating to the market intervention from Japan, China and the UK may entertain the USD/JPY traders ahead of the aforementioned US data.

Given the latest US inflation’s failure to underpin the US dollar’s strength, the incoming data should be taken with a pinch of salt.

Also read: US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise

Technical analysis

A daily closing beyond the tops marked yesterday, as well as during 1998, around 147.70 act as the key upside hurdle for the pair buyers to cross, failing to do so can trigger a pullback towards an ascending resistance line from late April, around 148.95 by the press time.