The pair will be one of the more interesting ones to watch on the day. 10-year yields in the US rose to its highest since 2007 and despite a slight drop today, it is still sitting above the pivotal 4.30% mark. USD/JPY is weighed down slightly by a softer dollar as well, down to around 145.60 levels from around 146.00 earlier:
USD/JPY vs US Treasury 10-year yields (%) hourly chart
A large influence on the pair continues to be the bond market, as seen above. The near-term price action now shows that the bias has turned back to being more neutral, with price sitting in between the 100-hour (red line) and 200-hour (blue line) moving averages again.
But if anything else, just be wary of bond market developments later on. There tends to be selling in US trading these days, driving yields higher and that could act as another driver for a push up in USD/JPY again.
That being said, buyers are also struggling to see too much upside unless there is a significant catalyst in general market developments. The Fed looks to be heading towards a pause while the BOJ isn’t hinting at much else after the policy tweak in July. That has led USD/JPY towards 145.00 on the back of higher yields in general but we are perhaps at intervention territory for Japan.
There are calls expecting a firmer hand by Tokyo at around 150.00 – similar to October last year – but the best time for intervention is when catching markets off-guard, as well as during times of thin liquidity.