USD/JPY jumps above 109.00 mark, back closer to multi-month tops
- USD/JPY gained strong traction on Friday amid a broad-based USD strength.
- A fresh leg up in the US bond yields helped revive demand for the greenback.
- The cautious mood might benefit the safe-haven JPY and cap gains for the pair.
The USD maintained its strong bid tone through the early European session and pushed the USD/JPY pair back above the 109.00 mark, closer to the nine-month tops touched earlier this week.
The pair caught some fresh bids on the last trading day of the week and broke out of a two-day-old trading range. A fresh leg up in the US Treasury bond yields assisted the US dollar to stage a solid rebound from one-week lows, which, in turn, was seen as a key factor driving the USD/JPY pair higher.
Even though Wednesday's US CPI report eased fears about rising inflation, the yield on the benchmark 10-year US government bond shot back to 1.6% area on Friday. Investors remain optimistic that a massive US stimulus package would spur economic activity and fuel inflationary pressure.
Meanwhile, elevated US Treasury yields now seemed to have unnerved investors and led to an intraday pullback in the US equity futures. This might extend some support to the safe-haven Japanese yen and turn out to be the only factor capping gains for the USD/JPY pair, at least for the time being.
Friday's US economic docket features the second-tier releases of the Producer Price Index and the preliminary Michigan Consumer Sentiment Index. The data, along with the broader market risk sentiment and the US bond yields, will produce some trading opportunities around the USD/JPY pair.
Technical levels to watch