USD/JPY bulls poke 141.00 to refresh 24-year high amid firmer yields ahead of US PMI

• USD/JPY rises for the eighth consecutive day as bulls cheer risk-on mood, firmer Treasury yields.
• Stimulus hopes, options expiries and no immediate challenges to BOJ’s easy money policy seem to favor buyers.
• Verbal intervention of Japanese policymakers, receding hawkish Fed bets test the upside momentum.
• Softer Japan data for Household Spending, Labor Cash Earnings also strengthened the pair.

USD/JPY bulls flourish during early Tuesday morning in Europe as they refresh the highest levels since 1998 during the eight-day uptrend. In doing so, the yen pair rose to 140.97 while cheering the firmer US Treasury yields and the market’s risk-on mood.

That said, the US 10-year Treasury yields rise 2.5 basis points (bps) to 3.21% by the press time. In doing so, the US benchmark bond coupons reverse Friday’s losses. Also portraying the risk-on mood could be the 0.50% intraday gains of the S&P 500 Futures, as well as a pullback in the US Dollar Index (DXY) from a 20-year high marked the previous day.

Chatters surrounding more aid packages to propel economic recovery seem to have favored the optimists during the full markets. That said, the incoming UK PM Liz Truss is up for a £130 billion energy plan while the People’s Bank of China (PBOC) cuts the Reserve Requirement Ratio (RRR). Further, politicians from Germany/Eurozone are all in to battle with the recession woes with a heavy push to defend energy companies and stock for winters.

Also, softer Japan data appears to propel the USD/JPY moves. Earlier in the day, Japan’s Overall Household Spending dropped to 3.4% YoY for July, from 4.2% expected and 3.5% prior. Further, the Labor Cash Earnings also eased to 1.8% on a yearly basis while compared to 2.5% market consensus and 2.2% prior.

It’s worth noting that the verbal intervention from Japanese policymakers seems to fail in defending the JPY bulls. Recently, Japanese Finance Minister Shunichi Suzuki said on Tuesday that “I have the impression that recent forex moves are becoming more significant.”

It should be noted that the multiple options expiries around 140.00, recently of around $626 million per Reuters, also keep the USD/JPY buyers hopeful. Additionally helping the pair is the CME’s FedWatch Tool that hints at the 60% chance of the Fed’s 0.75% rate hike in September, versus over 75% marked in the previous week. The easing in the hawkish Fed bets could be linked to the mixed US jobs report for August.

Moving on, the reaction of the traders from the US and Canada will be closely observed for clear directions. Also important will be the geopolitical headlines surrounding China, Russia and the US. Additionally, the ISM Services PMI for August, expected 55.5 versus 56.7 prior, should offer additional directions to the USD/JPY traders.

Technical analysis

USD/JPY bulls remain on the way to an upward sloping resistance line from late April, around 144.55, unless staying beyond July’s top near 139.40.