USDJPY tests the 50% of the years range
The USDJPY has moved to a new session high and in the process is testing the 50% of the year's trading range. That move has taken the price from a high of 118.60 to a low of 112.559. The 50% level comes in at 115.58 (see chart below). Another key level is the 100 and 200 bar MA on the 4-hour chart at the 115.85 level.
Helping the pair move higher is the move higher in US yields today. The 10 year yield is about about 6 bp in trading today and in the process has tested resistance at the 2.50% level (the high reached 2.4905% today). Looking at the daily chart, the high price back in June 2015 peaked at 2.49% area. In December before the run up to the peak at 2.6394%, the pair tested that 2.49% level and backed off. The pair is back up testing that key level today.
A break above that level would be more bullish for yields. Staying below could solicit a move back lower in yields. That in turn should influence the USDJPY. Of course the same could be said about the USDJPY. That is the pair has resistance at the 50% level at 115.58. Does a fall from that target, slow the 10 year yield rise.
In summary, the USDJPY and the US 10-year has been tracking each other of late. As the US rates have increased, so has the USDJPY moved higher. When the USDJPY corrected lower, , so did yields. Both are testing a resistance level. Will resistance hold? Will we get a break? It should have implications for both.
