20 Jan 2015
Treasury yields cap gains in USD/JPY pair
FXStreet (Mumbai) - The gains in the USD/JPY pair are being capped by the Treasury yields in the US, which fail to gain strength due to the weak global growth forecasts published by the International Monetary Fund (IMF).
The pair currently trades 0.59% higher for the day at 118.28 levels, after having eased-off from the high of 118.53. The gains have been capped since the long-end of the Treasury yield curve – 10-yr yields – erased gains after the IMF reduced its 2015 global growth forecast to 3.5%, down from the previous forecast of 3.8%. The 10-yr yield fell 1.2 basis points from the high of 1.826% to trade at the current level of 1.814%. Moreover, the treasuries gain due to safe haven demand, thereby pushing the yields lower. Thus, the USD/JPY pair, know to have a direct correlation with the 10-yr yields, erased part of its gains.
The Yen may gain further, if the European equities erase gains on IMF forecasts, leading to a further fall in the Treasury yields.
USD/JPY Technical Levels
The immediate resistance is located at 118.51, above which gains could be extended to 118.83 levels. Meanwhile, support is seen at 117.76 (10-DMA) and 117.48 (5-DMA) levels.
The pair currently trades 0.59% higher for the day at 118.28 levels, after having eased-off from the high of 118.53. The gains have been capped since the long-end of the Treasury yield curve – 10-yr yields – erased gains after the IMF reduced its 2015 global growth forecast to 3.5%, down from the previous forecast of 3.8%. The 10-yr yield fell 1.2 basis points from the high of 1.826% to trade at the current level of 1.814%. Moreover, the treasuries gain due to safe haven demand, thereby pushing the yields lower. Thus, the USD/JPY pair, know to have a direct correlation with the 10-yr yields, erased part of its gains.
The Yen may gain further, if the European equities erase gains on IMF forecasts, leading to a further fall in the Treasury yields.
USD/JPY Technical Levels
The immediate resistance is located at 118.51, above which gains could be extended to 118.83 levels. Meanwhile, support is seen at 117.76 (10-DMA) and 117.48 (5-DMA) levels.