USD/JPY retraces to 136.00 as yields pull back from multi-day high, BoJ talks eyed

• USD/JPY takes offers to renew intraday low, reverses from 10-week high.
• Bond bears take a breather after an active week that propelled yields toward multi-day high.
• Fading hawkish concerns over BoJ Governor Nominee Ueda previously propelled Yen prices.
• Strong US inflation cues, hopes of higher Fed bets keep buyers hopeful.
• Ueda’s speech in Japan upper house, government declaration for BoJ board will be important for immediate clues.

USD/JPY consolidates the biggest daily gains in three weeks as it renews its intraday low near 136.00 while reversing from the highest levels in two months during early Monday. In doing so, the Yen pair traces the US Treasury bond yields ahead of the key announcements concerning the Bank of Japan (BoJ).

That said, the US 10-year Treasury yields print mild losses around 3.93% while the two-year counterpart retreat from the highest levels since November 2022 as bond traders flirt with 4.82% level at the latest.

It should be noted that the mixed concerns surrounding the incoming BoJ board seemed to have also challenged the USD/JPY buyers. Previously, the easing hawkish concerns about incoming Governor Kazuo Ueda propelled the Yen pair. However, mixed comments from the Deputy Governor Nominees, namely Ryozo Himino and Shinichi Uchida, seemed to have probed the dovish bias surrounding the Japanese central bank afterward.

On the other hand, strong US inflation cues and hawkish Fed concerns favored the USD/JPY buyers previously. That said, the US Dollar Index (DXY) marked the biggest weekly jump since September 2022 in the last week as strong prints of the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditures (PCE) Price Index marked an impressive run-up. The same line allowed the Fed policymakers to reiterate their hawkish bias and underpin the market’s bets for higher Federal Reserve (Fed) rates.

Other than the US data and yields, the geopolitical fears surrounding Russia and China also propel the DXY and probe the USD/JPY pair’s latest weakness.

Amid these plays, S&P 500 Futures remain indecisive even as Wall Street benchmarks posted the biggest weekly fall in 2023. That said, the US two-year Treasury bond yields rose to the highest levels since early November 2022, staying mostly unchanged at the latest.

That said, USD/JPY pair remains on the buyer’s radar despite the latest pullback from the multi-day top. However, any hawkish comments from BoJ Governor Nominee Ueda may help extend the Yen pair’s latest downside. That said, Ueda is up for a speech in the Japanese Upper House around 04:10 GMT.

Technical analysis

A two-month-old ascending resistance line restricts immediate USD/JPY run-up around 136.50 ahead of convergence of the 100-DMA and the 200-DMA, around 137.10-15.