The pair now trades at 149.98 and at the highs for the day, albeit in a rather constricted range. It’s been a while coming and the pair has been teasing for a push back towards 150.00 since last week already. The last attempt in early October was shot down by Japanese officials but amid higher yields, will Tokyo feel necessary to step in again?

I fear that the longer that USD/JPY is handicapped just under the 150.00 mark, it will create much more frustration for dollar bulls. They are getting anxious but looking at the tamer reaction across the board for the dollar, it is looking like traders need this break higher in USD/JPY to really move the other pairs too.

And if that doesn’t come, you have to wonder how long can the dollar hold up especially if at some point we are to run into a retracement in the bond market after all the heavy selling.

This article was written by Justin Low at www.forexlive.com.

10-year Treasury yields are at their highest since 2007, touching 5.018% currently as the selling in the bond market continues. I would’ve expected a slightly more reactive function in the dollar but that hasn’t really been the case. The greenback is rather muted across the board and it is equities that have reacted much more. S&P 500 futures are now down at the lows for the day, softer by 0.7%:

It has been one-way traffic for equities since the opening bell in Europe and the fact that 10-year yields in the US have crossed over above the 5% mark is just compounding woes at this point.

Going back to FX, the dollar is rather muted with EUR/USD flattish at 1.0595, USD/JPY still thereabouts at 149.93, and GBP/USD flat at 1.2155 on the day. It is only the aussie and kiwi that has weakened slightly with AUD/USD down 0.3% to 0.6291 currently but that owes more to the drop in risk trades amid higher yields, rather than any outright dollar strength.

This article was written by Justin Low at www.forexlive.com.