USD/JPY peeps above 111.00 as 10-yr T-yield gains 2bps

A descent pull back in the treasury yields from near one-month lows and the oversold conditions on the Intraday charts lifted the USD/JPY pair to a session high of 111.20.

The sellers ran out of steam at 110.51 (61.8% Fib Retracement of 108.13-114.37) as the RSI indicator hit the oversold territory on the 1-hour and 4-hour chart. The technical correction was partly fuelled by the recovery in the 10-year treasury yield from the low of 2.212% to 2.243%.

The sustainability of the pullback in both the USD/JPY and the treasury yields depends on the political situation in the Washington.

Former FBI boss to lead Russia enquiry

A former FBI boss, Robert Mueller, has been named special counsel to lead an inquiry into Russia's alleged interference in the US election. The appointment has been widely praised by both sides.

Meanwhile, House Oversight Chairman Jason Chaffetz is inviting former FBI director James Comey to testify next Wednesday at 9:30 a.m. Chaffetz said that Russia prove could go on for years and he is not sure of the Comey memos exist.

Headlines may change in the short-run

President Trump is set to visit Saudi Arabia later this week. He is also scheduled to visit Israel and Palestine. The next destination would be Rome and the Vatican.

Consequently, the political turmoil may be put on the back burner in the short-run. That may aid further recovery in the USD/JPY and Treasury yields, although caution is still advised.

An upbeat Japanese GDP figures released this morning have not had any major impact on the Yen pairs.

USD/JPY Technical Levels

The spot was last seen trading around 111.15. The resistance is seen at 111.25 (50% Fib R of 108.13-114.36) ahead of 111.54 (50-DMA) and 111.98 (38.2% Fib R of 108.13-114.36).

On the lower side, breach of support at 111.00 (psychological level) could yield a re-test of 110.51 (61.8% Fib R of 108.13-114.36). A break lower would expose 110.00 levels.