USD/JPY offered near 111.50, reverts to 111 handle

The bulls appear to have faced exhausting in the European session, leading to a minor retracement in the USD/JPY rally to fresh five-week peaks.

USD/JPY capped below 111.50

The dollar-yen pair came under renewed selling pressure and dropped sharply almost 40-pips mainly on the back of rising US treasury yields, especially the shorter duration one, as markets have already considered a June Fed rate hike a done deal following Yellen’s comments last Friday. The 2-year and 10-year yields on the US treasuries jump +3.13% and +0.87% respectively. At the same time, USD/JPY eases to 111.06, up +0.62%, while the USD index trades modestly flat around 95.95 levels.

Earlier on the day, the major rose as high as 111.45 after the yen weakened on reports that Japan’s PM Abe will delay sales tax hike by two and a half years. However, the Japanese yen managed to bounce-back against the American dollar as the USD bulls took a pause and halted greenback’s recent upsurge.

Next in focus for the major remains the US Core PCE index and NFP data, besides the Chinese manufacturing PMIs will be also closely eyed  for fresh cues on the risk sentiment.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 111.36/45 (April 5 High/ Daily R3). A break above the last, the major could test 111.97 (100-DMA). While to the downside, the immediate support is seen at 100.38/37 (5-DMA/ Daily low) and below that at 110 (round number).