USD/JPY Forecast: Yields and equities lead the way

USD/JPY Current price: 108.87

• The yield of the US 10-year Treasury note surged to an intraday high of 1.69%.
• Japan will have a busy macroeconomic calendar on Thursday after a bank holiday.
• USD/JPY has room to extend its gains, mainly on a break above 109.20.

The USD/JPY advanced to 109.21 intraday, ending it sub-109.00. The pair advanced throughout the first half of the day following the positive tone of equities, later getting a boost from upbeat US growth-related data. The pair was also supported by rising US Treasury yields, as that on the 10-year note peaked at 1.69%. Nevertheless, the pair gave up as yields retreated while US indexes edged lower, posting modest intraday losses.

Japan celebrated a bank holiday on Thursday and will come back with quite a busy macroeconomic calendar. The country will publish March Tokyo inflation, expected at .0.2% YoY, Industrial Production for the same month, March unemployment data and the April Consumer Confidence Index.

USD/JPY short-term technical outlook

The USD/JPY pair still has chances of recovering ground, according to the 4-hour chart. The pair holds above a bullish 20 SMA, also above its 100 SMA, but meeting sellers at around a directionless 200 SMA providing dynamic resistance at 109.20. Technical indicators have picked up within positive levels, but their bullish strength is limited. Bulls will likely attempt a test of the 110.00 threshold if the pair clearly breaks above 109.20.

Support levels: 108.70 108.25 107.90

Resistance levels: 109.20 109.60 110.00

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