• US Treasury yields rose due to a decline in rate cut expectations.

• The likelihood of a Fed rate cut in June fell to around 54%.

• Japan’s Finance Minister, Shunichi Suzuki, repeated his warning against sharp currency moves.

In a tight move, the USD/JPY price analysis leaned bullish as the yen weakened due to a rise in US Treasury yields. However, warnings of a possible intervention kept the USD/JPY pair from breaching the $152 level. Meanwhile, the dollar was steady ahead of the US inflation report.

US Treasury yields rose on Tuesday due to a decline in rate cut expectations. The likelihood of a Fed rate cut in June fell to around 54% after Friday’s jobs report. An unexpected increase in employment in March had markets shifting their outlook on US interest rates.

Currently, investors expect 60bps of cuts in 2024, a smaller figure than the Fed’s forecast of 75bps. Consequently, short-term yields, which reflect rate-cut expectations, have rallied. Ideally, a rally in yields would have pushed the USD/JPY pair higher. However, Japanese authorities have kept a lid on price increases with their repeated warnings about a possible intervention.

On Tuesday, Japan’s Finance Minister Shunichi Suzuki repeated his usual statement that authorities would do whatever it takes to deal with excessive currency moves. At the same time, Bank of Japan governor Kazuo Ueda hinted at possibly reducing economic stimulus if inflation continues to trend higher. However, a catalyst for the dollar would likely bring back sharp moves.

Notably, investors are awaiting the US inflation report. Hotter-than-expected figures could push the USD/JPY price beyond $152, prompting an intervention.

USD/JPY key events today

Traders will likely remain on the sidelines, as no high-impact reports are coming from the US or Japan.

USD/JPY technical price analysis: Bullish momentum wanes near a solid barrier

On the technical side, the USD/JPY price is above the 30-SMA, showing bulls are back in the lead. The previous sharp bearish move has reversed, and now the price is approaching the pivotal 152.00 key resistance level.

Although the RSI is above 50, the bullish momentum has gradually faded. As a result, there is a bearish RSI divergence that might allow bears to take control. If bulls fail to regain enough momentum to breach the 152 level, bears might break below the 30-SMA to target 150.00. Such a move would allow the price to retrace 38.2% of the previous trend.

https://www.forexcrunch.com/blog/2024/04/09/usd-jpy-price-analysis-soaring-us-treasury-yields-weaken-yen/