USD/JPY gains as the US 10-year bond yield climb

• USD/JPY gains steam sponsored by overall US Dollar strength and high US yields.
• Expectations that the US Federal Reserve would cut rates had been adjusted.
• Upcoming US data eyed, the ISM Services PMI and JOLTs job openings.

USD/JPY edges higher by more than 0.30% on Monday, though it remains below the Ichimoku Cloud (Kumo), which suggests the pair is undergoing an ongoing upward correction as the pair resumes its downward trend. Hence, the major Is trading at 147.23 after hitting a daily low of 146.22.

The pair sees an uptick, trading at 147.23, as market dynamics shift following recent economic data and Fed signals

The USD/JPY pair remains trading in an uptrend as US Treasury bond yields advance, mainly the 10-year benchmark note, rising close to ten basis points at 4.289%, a tailwind for the major. Another factor is that investors aggressively priced in rate cuts by the US central bank, according to the Chicago Board of Trade (CBOT) data.

Last Friday, the Federal Funds Rate futures contract for December 2024 suggested the US central bank would cut rates by 140 basis points to 4.105%. Nevertheless, the same contract has witnessed a ten basis point jump due to investors reducing rate-cut bets by Jerome Powell and Co.

On the data front, US Factory Orders disappointed investors, as the US Commerce Department revealed a contraction of -3.6% in new orders for US made goods, below September’s 2.3% expansion, though missed estimates of a -2.8% contraction. It’s the most significant monthly drop since April 2020. The data failed to trigger a reaction in the markets, which are eyeing the release of the ISM Non-Manufacturing PMI on Tuesday, alongside employment data.

On the Japanese front, the Japanese Yen (JPY) will get direction from the Tokyo inflation report, alongside Jibun Bank Services and Composite PMIs.

USD/JPY Price Analysis: Technical outlook

The daily chart portrays the pair as neutral to downward biased, with the USD/JPY staying below the Kumo. If buyers want to shift the bias, they must reclaim key resistance levels, as they need to break above the top of the Kumo, as of Today, seen at 149.40. Once done, the next resistance would be 149.50 before testing the 150.00 figure.

On the other hand, USD/JPY falling below the 147.00 figure could exacerbate a test of the September 11 low at 145.89, ahead of the September 1 daily low at 144.44.