USD/JPY pares the biggest daily loss in a month around 139.00 as yields stabilize after a slump

• USD/JPY bounces off weekly low while consolidating the biggest daily loss since early May, lacks upside momentum though.
• US 10-year Treasury bond yields remain steady after falling the most in over a week.
• US Dollar licks its wounds amid mixed Fed concerns, Yen pair sellers remain optimistic.

USD/JPY stays sidelined near 139.00 as Tokyo opens for Friday’s trading, after witnessing a slump in the Yen pair the previous. In doing so, the risk-barometer pair justifies the market’s mixed concerns amid mostly downbeat US data and bond market optimism. The same results in the receding hawkish Fed concerns and weigh on the USD/JPY price ahead of the market’s consolidation amid a light calendar and cautious mood before the next week’s US Consumer Price Index (CPI) and the Federal Open Market Committee (FOMC) monetary policy meeting.

The benchmark US 10-year Treasury bond yields reversed from the highest levels in a fortnight to 3.72% the previous day, around the same levels by the press time, whereas the two-year counterpart also snapped a two-day winning streak to drop to 4.52% at the latest.

On the other hand, US Initial Jobless Claims rose to 261K in the week ended on June 02 versus 235K expected and 233K prior (revised). With this, the four-week average rose to 237.25K from 229.75K previous readings. Further, the Continuing Jobless Claims dropped to 1.757M in the week ended on May 26 from 1.794M prior (revised), compared to 1.8M market forecasts. Earlier in the week, the US ISM Services PMI, S&P Global PMIs and Factory Orders also printed downbeat outcomes and pushed back the Fed hawks while weighing on the US Dollar Index (DXY).

While the yields exert downside pressure on the USD/JPY price and the US data also weigh on the US Dollar, the risk appetite struggles to justify the market’s optimism amid the hawkish comments from International Monetary Fund (IMF) spokesperson Julie Kozack. On Thursday, the global lender flagged the inflation woes and pushed major central banks, including the US Federal Reserve (Fed), towards further rate hikes. "If inflation does prove to be more persistent than expected, then the Fed may need to push interest rates higher for longer," IMF’s Kozack told reporters at a regular briefing.

As a result, the S&P500 Futures struggle for clear directions even as Wall Street closed with gains.

Above all, the latest divergence between the Bank of Japan (BoJ) and the US Federal Reserve’s (Fed) monetary policy bias seems to keep the USD/JPY bears hopeful.

Moving on, a light calendar can keep the USD/JPY on its way to posting the second weekly loss while bracing for the upcoming week’s key catalysts.

Technical analysis

A 12-day-old symmetrical triangle restricts immediate USD/JPY moves between 138.55 and 140.05 in that order.