USD/JPY tracks rebound in US Treasury yields above 115.00

• USD/JPY reverses the previous day’s losses, picks up bids to refresh intraday high of late.
• US 10-year Treasury yields regain upside momentum, equities dwindle.
• Japan's economics came in mixed, covid-led measures likely to extend in Tokyo.
• Trade, geopolitical headlines entertain traders ahead of second-tier US data.

USD/JPY takes the bids to refresh intraday high around 115.20, consolidating the week-start losses as Tokyo opens for Tuesday.

The yen pair’s recent run-up could be linked to the cautious optimism in the market, as well as recovery in the US bond coupons after a sluggish start. It’s worth noting that mixed data at home and virus woes challenge the recent advances ahead of the US trade numbers.

The US 10-year Treasury yields rose 1.1 basis points to 1.92%, close to the highest levels since late 2020, while the US stock future print mild gains around 4,485 at the latest. That said, the benchmark US T-bond coupons eased from a two-year high the previous day while Wall Street marked sluggish closing.

Talking about data, Japan’s Overall Household Spending dropped to -0.20% YoY in December versus +0.3% forecast and -1.3% prior. On the same line were Current Account details for December, ¥-370.8B versus market consensus of ¥73.5B and ¥897.3B previous readouts. Though, the Trade Balance - BOP Basis improved to ¥-318.7B from ¥-431.3B during the stated month.

It’s worth noting that the US-Japan talks over easing Trump-era steel tariffs and Russia’s recently confirmatory tone add to the bullish bias of the risk-barometer pair.

On the contrary, the US-China trade tussles and fears of the hawkish Fed challenge market’s optimism, underpinning the US dollar and the USD/JPY prices. “China-US trade faces new threats in 2022, with no new deal in sight,” said the South China Morning Post (SCMP).

Also read:

Moving on, the US Goods and Services Trade Balance for December, expected $-83B versus $-80.2B, may offer intermediate clues to the USD/JPY prices ahead of Thursday’s key US Consumer Price Index (CPI).

Read: Do not expect volatility to ease as US CPI is due this week

Technical analysis

A bearish spinning top candlestick on the daily play challenges USD/JPY buyers below the one-month-old resistance line near 115.35.