Risk aversion retains control of financial markets on Wednesday, as market participants speculate about the US Federal Reserve escalating quantitative tightening to fight stubbornly high inflation. The Consumer Price Index in the country soared to 8.6% YoY in May, the highest in over four decades.
At the same time, investors keep an eye on slowing economic growth, as economies keep struggling to stand back on its feet following the tough global measures imposed in March 2020, when the coronavirus pandemic stormed the world.
US government bond yields provide support to USD/JPY, as the 10-year Treasury note currently yields 3.44% after touching 3.456%, its highest in over a decade.
The USD/JPY pair trades near a weekly high of 135.19, a level that was last seen in October 1998, and despite extreme overbought conditions in the daily chart, there are no signs of bullish exhaustion. The pair is gathering directional momentum in the near term, after consolidating around the current price zone since early June.
Beyond the mentioned weekly high, the next relevant resistance level is 136.90, October 1998 monthly high. A strong static support area comes around 133.30/40 where buyers have been appearing in the last few days.

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