With there still being a keen focus on the bond market, the yen remains a rather sensitive currency in trading for the time being. The bond selloff is still taking place, with 2-year Treasury yields hitting 2.50% earlier for the first time since early 2019.
The flattening of the curve also continues to play out with 2s10s firmly inverted now at around -6 bps and also 2s30s which are seen at -0.4 bps currently. Typically, that hints at a recession coming in the next 1-2 years but so far the market is taking things in stride as risk tones are keeping a little firmer ahead of European trading.
Taking a look at USD/JPY, the pair will be looking to see what comes next after having hit the key 125.00 level in March trading. Since the slight pullback, there is some stability with buyers looking to resume some upside momentum but have so far found it tough to crack past the 123.00 level.
The near-term chart underscores that sentiment:
Price action is residing above the 100 and 200-hour moving averages @ 122.23-34, so buyers are in near-term control. However, there is still seemingly a lack of impetus or drive to extend the upside back towards the key resistance @ 125.00. For now, even the 123.00 level is offering some minor resistance.
There is a lack of conviction as we get things going on the week but if anything else, keep the focus on risk sentiment and bond yields as those will continue to be key drivers in trading this week.