The primary theme in right this moment’s holiday-thinned FX commerce is yen weak point. It is a reversal from the development late final week, the place the yen was ascendant.
The sample on the USD/JPY chart is a little bit of a three-candle reversal, though there’s nonetheless some work to do right this moment.
The pair is up 37 pips to 114.57.
What the subsequent transfer will hinge on is Treasury yields and the general threat atmosphere. The US bond market is not buying and selling right this moment however on Friday, US 10s pushed up near 1.80% as soon as once more. If it could actually get by means of that vary, it clears the way in which for a check of two% and that would rapidly get USD/JPY again to the current highs.
We’re into the quiet interval forward of the January 26 FOMC choice so the bond market would possibly keep cool for a time however we’re additionally into the beginning of earnings season and I think that inflation might be excessive on the agenda in company convention calls. That might filter again by means of the market and push up yields.