USD/JPY seesaws around 110.00 amid a pause in US Treasury yields
- USD/JPY wobbles near one-week high after two-day uptrend.
- US Treasury yields snap two-day recovery moves, S&P 500 Futures print mild gains.
- US Retail Sales, pre-Fed sentiment should be observed for fresh impulse.
USD/JPY stays firmer around the weekly top near 110.10, recently struggling near 110.05, as markets in Tokyo open for Tuesday’s trading. The yen pair rose notably during the last two days as the safe-haven buying put a bid under the US dollar. However, the latest cautious sentiment ahead of the US Retail Sales for May and Wednesday’s Federal Open Market Committee (FOMC) meeting probes the pair buyers.
Despite offering an indecisive closing the previous day, the US dollar index (DXY) stayed near the monthly top surrounding 90.60.
Behind the moves could be the mismatch of the recent pick-up in the US Treasury yields and a recovery in the inflation expectations that highlight tapering woes pre-Fed.
It’s worth noting that the fears of coronavirus (COVID-19) in Japan and a snap election joins broad cautious sentiment before this week’s key event, FOMC, to probe the pair’s buyers, due to its risk-barometer status.
Additionally, Japan’s final print of Industrial Production for April, 15.8% versus 15.4% initial estimation, also favored USD/JPY buyers.
Amid these plays, S&P 500 Futures stay mildly bid around the record top whereas the US 10-year Treasury yields ease one basis point (bp) to stop the previous two-day recovery around 1.49% by the press time.
Given the light calendar and cautious mood ahead of the key data/events, USD/JPY may remain sidelined before the US Retail Sales for May. However, the US dollar pick-up during the pre-Fed sessions could keep buyers hopeful.
Read: US May Retail Sales Preview: Analyzing major pairs' reaction to previous releases
Technical analysis
Although the monthly top surrounding 110.30-35 acts as a tough nut to crack for the USD/JPY bulls, the pair sellers may not risk entries until the quote stay beyond a seven-week-old support line, around 109.45.