USD/JPY jumps above 124.00, posts fifth consecutive weekly gain
08.04.2022, 15:33

USD/JPY jumps above 124.00, posts fifth consecutive weekly gain

  • USD/JPY heads for the highest daily close since August 2015.
  • The US dollar remains strong versus the Japanese yen supported by higher US yields.
  • The divergence between the Bank of Japan and the Fed is widening.

The USD/JPY is rising for the sixth day in a row on Friday. During the American session climbed to 124.67, the highest level since March 28, and then pulled back toward 124.30 on the back of a volatile US dollar.

US yields continue to tell the story

The USD/JPY continues to move in line with US yields. The 10-year peaked earlier at 2.72%, the highest since February 2019 and the 30-year to 2.73% the highest since May 2019. The key driver is the plan of the Federal Reserve to raise interest rates more aggressively and to start the reduction of its balance sheet.

The ongoing decline in bonds still offers support to the greenback. The DXY is now up just 0.10% but earlier, it reached 100.19, the highest in almost two years.

The yen is among the worst performers, also affected by the improvement in risk sentiment. Stocks in the US are trimming weekly losses. The Dow Jones is up by 0.63% and the Nasdaq is still down, falling by 0.61% but off lows.

The USD/JPY is about to post the fifth consecutive weekly gain. The divergence of the monetary policy path of the Federal Reserve and the Bank of Japan is set to widen and could continue to support the rally of the pair, which is trading at levels not seen since 2015.

Technical levels

 

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