USD/JPY forms double tops near 115.00 despite upbeat yields, US PMI in focus

• USD/JPY consolidates the biggest daily gains in two weeks.
• US President Biden’s Fed nominations propel rate hike expectations, yields and DXY.
• Comments from Fed’s Bostic, Treasury Sec. Yellen seems to offer the latest pullback.
• Preliminary US PMIs for November, Japan stimulus should be watched closely for fresh impulse.

USD/JPY refreshes intraday low to 114.73 even as traders in Tokyo cheer Labor Thanksgiving Day’s holiday on Tuesday. In doing so, the pair buyers catch a breather following the biggest daily jump in a fortnight even as the US Treasury yields remain firmer.

That said, the US 10-year Treasury yields rose more than the previous week’s loss in a single day on Monday on US President Joe Biden’s decision to nominate Jerome Powell for another term as the Federal Reserve (Fed) Chair and Richard Clarida for Vice-Chairman. The nominations propelled Fed rate hike concerns and helped the US Dollar Index (DXY) to jump towards the highest level since July 2020, around 96.50.

It’s worth noting that Atlanta Federal Reserve President Raphael Bostic recently backed the Fed tapering and rate hike plans while also saying we still have a covid economy, as reported by Reuters.

On the same line, US Treasury Secretary Janet Yellen mentioned during the Bloomberg interview that price pressures subside as life normalizes in 2022.

Also recently favoring the Japanese yen could be the receding covid cases in the Asian major and hopes of a huge stimulus to ward off the virus-led economic hardships. “Tokyo reported six new COVID-19 cases on Monday, the fewest since May 31 last year when five cases were confirmed, the metropolitan government said,” per Kyodo News.

It should be noted that the US Treasury yields seesaw after the previous day’s heavy run-up, marking a cautious sentiment in the market ahead of the preliminary PMIs for November. Though, mildly bid S&P 500 Futures keep the USD/JPY buyers hopeful.

In addition to the PMIs, headlines concerning China and COVID-19 will also offer intermediate moves to the USD/JPY.

Above all, yields are likely to remain firm amid the Fed rate hike concerns and may underpin the USD/JPY run-up unless any big surprise erupts.

Technical analysis

Although double tops around 115.00 restrict the USD/JPY pair’s short-term upside, 20-DMA and two-week-old rising trend line, respectively around 114.00 and 113.80, limits immediate downside of the quote.