USD/JPY rises further above 130.00 as US yields jump
05.05.2022, 15:43

USD/JPY rises further above 130.00 as US yields jump

  • US dollar rises across the board on risk aversion and higher US yields.
  • S&P 500 drops 3.40%, erases Fed’s rally.
  • USD/JPY tests weekly highs after sharp reversal.

The USD/JPY rose further climbing above the level it had before the FOMC meeting. It is testing the weekly high near 130.40 after rising from than 150 pips from the daily lows boosted by higher US yields.

The sell-off in Treasuries resumed after a two-day pause and the day after the FOMC meeting. The dollar started to decline after the release of the Fed statement announcing a 50bps rate hike. The comments from Powell discarding a 75bps rate hike triggered mores losses for the greenback that bottomed on Thursday during Asian hours. Back then, USD/JPY was trading near 128.70.

The dollar started to recover and recently it gained more speed to the upside. It erased all losses from the Fed meeting and is back near the recent top. The DXY is up by 1.20% at 103.70. At the same time, US yields jumped. The US 10-year stands at 3.09% and the 30-year at 3.18%, the highest level since the fourth quarter of 2018.

Risk aversion is not preventing the selloff in Treasuries and it keeps the yen limited. The Japanese currency remains neutral across the board even as the Dow Jones tumbles 2.57%, the S&P 3.00% and the Nasdaq 4.19%.

The USD/JPY is testing the 130.40/50 area. Above the next resistance is seen at 130.75, and then comes the 2022 top at 131.25. If the pair fails to break 130.40 it could pull back initially to 130.30 and then to 129.70.

Technical levels

 

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