USD/JPY jumps to multi-month high following US data

• USD/JPY soared to its highest level since November 2022 at 144.17.
• Durable Goods and Housing data figures came in above expectations.
• US bond yields rise ahead of Powell’s speech on Wednesday.

On Tuesday, the USD/JPY jumped to a fresh multi-month high at 144.17 following optimistic economic activity data. The Greenback gained traction on the back of rising US Treasury Bond yields ahead of Jerome Powell’s speech on Wednesday. Governor Ueda from the Bank of Japan (BoJ) will also deliver a speech, potentially impacting the JPY price dynamics.

US Bond yields rise after US economic data

The US Census Bureau reported that Durable Goods Orders rose by 1.7% from May, while the markets expected a 1% contraction. Orders excluding Transportation rose by 0.6% and the ones excluding defense, by 3%. In addition, New Home Sales rose by 12% in May, way above the 0.5% variation foreseen by the markets, and signaled resilience in the housing market.

As a reaction, the DXY Index found support at a daily low of 102.32 and recovered to 102.50. US bond yields also recovered as strong economic activity may hint at a more aggressive Federal Reserve (Fed) tightening in the future. The 2-year rate rebounded from a low of 4.65% to 4.75%, while the 5 and 10-year yields increased to 4.01% and 3.75%. In addition, the bond market may see volatility on Wednesday, when Jerome Powell will deliver a speech at the European Central Bank Forum in Sintra, Portugal.

That being said, the Yen may rise on prospects of a BoJ intervention if the Japanese currency continues to lose value against the USD, as the pair approaches 145.00. Governor Ueda will also speak at the ECB Forum where investors will look for clues for both a potential intervention in the JPY and the next steps for their monetary policy.

USD/JPY: Levels to watch

According to the daily chart, the USD/JY holds a bullish outlook for the short term but a correction shouldn’t be taken off the table as indicators; specifically, the Relative Strength (RSI) has stood in overbought territory for almost a week. Moreover, the Moving Average Convergence Divergence (MACD) prints rising green bars while the pair trades above the 20,100 and 200-day Simple Moving Averages (SMA).

Support levels to watch: 143.00,142.30, 142.00
Resistance levels to watch:144.00,144.50,145.00

USD/JPY Daily chart