USD/JPY hovers around 115.85 as the US 10-year T-bond yield cling to the 2% mark

• The USD/JPY is barely flat during the day, as market mood conditions remain mixed.
• US Treasury yields advance, led by the 10-year above the 2% mark.
• USD/JPY bias is tilted upwards as USD buyers attack 116.00, followed by the YTD high.

The USD/JPY barely falls during the North American session, following Thursday’s volatile trading day, which witnessed the US economy printing a 7.5% inflation rate, the largest since 1982. As a result, US Treasury yields led by the 10-year note, pushed above the 2% mark, while the greenback seesawed, with the US Dollar Index, rising towards 96.00, falling to daily lows at 95.40s, to finally finish 0.25% up near 95.79. At the time of writing, the USD/JPY is trading at 115.88, down 0.14%.

On Thursday, St. Louis Federal Reserve President James Bullard crossed the wires. He said that he favors 1% of rate increases to the Federal Funds Rate (FFR) by July 1st. When asked about a 50 bps increase in the March meeting, he said he does not want to “prejudge that meeting.”

The Bank of Japan (BoJ) announced that it would purchase an unlimited amount of 10-year Japanese Government Bunds (JGBs) on February 14th, at 0.25%, to keep control of the Yield curve.

Sources cited by Reuters said that “By announcing its plan days in advance, the BOJ sought to discourage players from testing the 0.25% line and pre-empt any breach of that level - without actually having to purchase JGBs.”

In the meantime, the US 10-year Treasury yield reclaims the 2.03% threshold, almost flat a tailwind for the USD/JPY, which trimmed its 0.11% losses, down to 0.08%.

An absent Japan economic docket left USD/JPY players adrift to US macroeconomic data. On the US front, the University of Michigan Consumer Sentiment Index fell to 61.7, the lowest level since October 2011. Regarding inflation expectations for 1-year, rose to 5%, from 4.9% in January.

USD/JPY Price Forecasts: Technical outlook

The USD/JPY maintains the bullish bias in place. The upbreak of a one-month-old trendline accelerated the move towards 116.00, which was broken on Thursday, would be the first support level, as USD bulls prepare an attack towards the YTD high at 116.35.

That said, the USD/JPY first resistance would be 116.0. Breach of the latter would expose the YTD high at 116.35, followed by a challenge of a 24-month-old downslope trendline around 117.00. A clear break of that ceiling level would pave the way towards January 2017 swing high at 118.61.