USD/JPY grinds at yearly top around 145.00 as BoJ intervention, sluggish yields test bulls

• USD/JPY snaps four-day uptrend as bulls take a breather at the YTD top.
• Yields lack follow-through after refreshing multi-day top, BoJ offers unlimited bond buying to defend Yen price.
• Absence of fresh risk catalysts also contributes to USD/JPY retreat.
• Qualitative headlines, BoJ news and Fed Minutes eyed for clear directions.

USD/JPY bulls take a breather at the highest level in a year as market players seek more clues to defend the Yen pair’s early-day run-up towards refreshing the Year-To-Date (YTD) peak amid the initial hour of Monday’s European session. In doing so, the Yen pair also justifies the Bank of Japan’s (BoJ) bond market moves, as well as the US Dollar’s retreat despite sour sentiment.

That said, the Bank of Japan (BoJ) offered unlimited Japanese Government Bonds (JGBs) of 5-10 years of residual maturity at a fixed rate on early Monday in Asia. With this, the Japanese central bank tames the yields on the key JGBs to put a floor under the Japanese Yen (JPY) price.

On the other hand, the US Dollar Index (DXY) retreats from the one-month high to 102.95 by the press time as market players seek more clues to extend the week-start risk aversion even as China-inflicted woes fade. It’s worth observing that a suspension of its bond trading by China’s Country Garden joins the non-receipt of the payments from a subsidiary of Chinese conglomerate Zhongzhi Enterprise Group to bolster the debt woes of China. Elsewhere, Russia’s readiness to equip new nuclear submarines with hypersonic missiles and the US-China trade war also contributes to the risk-off mood.

The aforementioned risk-negative headlines previously joined the upbeat US Treasury bond yields and concerns about the Bank of Japan’s (BoJ) defense of the ultra-easy monetary policy to propel the USD/JPY price towards refreshing the YTD high with 145.25.

Against this backdrop, the S&P500 and Euro Stoxx Futures remain mildly offered while the US 10-year Treasury bond yields grind higher around 4.17% despite retreating from a one-week high marked earlier in the day.

Looking ahead, inflation clues from Japan will join the US Retail Sales and Fed Minutes to direct the short-term USD/JPY moves. However, major attention will be given to the risk catalysts and yields for clear directions.

Technical analysis                                                                                               

A 100-pip area within a three-week-old rising triangle formation, currently between 145.40 and 144.40, prods the USD/JPY buyers amid overbought RSI (14) conditions.