USD/JPY rebounds sharply back above 106.00 as US yields soar

• Pair reversed and trimmed losses amid higher yields. 
• DXY reached 3-day highs supported by US data.  

USD/JPY reversed its intraday trend after reaching at 105.59 the lowest level in a week. The pair rose more than 50 pips from the lows and erased most of the day’s losses. It advanced above 106.00 and recently hit 106.16. 

Between data, Trump and yields

The pair started to move higher after the latest round of US data. Industrial Production, Capacity Utilization, JOLTs Job Openings and Consumer sentiment data, all surprised to the upside and offset weak housing data released earlier. 

Despite reversing against the US dollar, the yen remains in positive territory versus most of its rivals on Friday, supported by fears of a global trade war, speculations about Trump’s cabinet and ahead of the FOMC meeting. 

USD/JPY was boosted on Friday by higher US yields and a rally in Wall Street. The 10-year yield rose from 2.80 to 2.85%, 2-day high. The DOW JONES was up 0.57% and the S&P 0.48%. 

USD/JPY levels to watch 

If the US Dollar continues to recover, resistance levels might be located at 106.35 (Mar 16 high), 106.70 and 106.95. On the flip side, support now could be seen at 106.00 (psychological/20-hour moving average), 105.75 (Mar 15 low) and 105.45/50 (Mar 7 low).