From earlier: USD/JPY bounce starts to gain some traction

The traction is certainly building up to a stronger momentum today with the pair now touching the 151.00 mark. As mentioned in the post above, it comes after the bounce today moved past the 100-hour moving average (red line). That switched the near-term bias to being more neutral and opens up some room to roam for the pair. The 200-hour moving average (blue line) is still a distance away at 151.75 currently.

The dollar is keeping steadier but is not seeing broad-based strength against the rest of the major currencies bloc. That being said, higher Treasury yields is also helping with the mood as well as a bid in Japanese bonds on the day.

10-year yields in the US are up 3.5 bps to 4.254% while 10-year yields in Japan are down 2 bps to 1.060%. The latter is perhaps an indication of traders toning down rate hike expectations on the BOJ. The odds of a 25 bps rate hike are now at ~37%, down from ~54% yesterday.

In the bigger picture though, buyers are keeping a solid bounce off a test of the 100-day moving average this week. So, that is encouraging. It will now come down to US labour market data to vindicate the moves we’re seeing in European morning trade and if there is scope for a further rebound on the week.

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