USD/JPY climbed to a three-week high near 158.30 after a hotter-than-expected September PMI reading and a weak five-year Treasury auction pushed 10-year yields above 5%. The pair is now testing resistance at its 200-day moving average, with traders watching for signs of Japanese intervention as it nears 160.
USD/JPY has climbed to 158.30, a three-week high, after briefly dipping below the 158.00 level in Asia trading. The overnight high sits at 158.40, just short of the pair's key technical resistance.
Treasury yields drive the dollar higher
Higher Treasury yields are behind the move, extending a broader dollar rally underway since overnight trading. The 10-year Treasury yield pushed beyond 5% after flirting with that threshold for a week, giving bond vigilantes a catalyst to act.
The US flash composite PMI for September jumped from 56.0 to 58.4, the strongest reading since July 2021, while input costs accelerated to near a four-year high. Adding to the pressure, a $70 billion five-year Treasury auction cleared at a high yield of 5.033% with a basis-point tail of 3.1 and a bid-to-cover ratio of 2.21, pointing to soft demand.
Together, stronger growth, sticky inflation, higher oil prices and shaky bond demand have created an uncomfortable combination for Treasuries. That combination is pushing the dollar higher against most major currencies, with USD/JPY among the more notable movers.
Resistance builds near the 200-day average
USD/JPY is now contesting the same resistance levels it faced overnight. The 200-day moving average sits at 158.43, currently capping the upside. A trendline drawn from the July and early September highs adds another layer of resistance around 158.22.
A firm break above the 158.22-158.43 region would open the path toward 159.00 and beyond, with the 100-day moving average at 159.54 the next level to watch.
Traders eye intervention risk near 160
The closer USD/JPY moves toward the psychological 160 level, the greater the chance Tokyo officials push back before considering another round of intervention. The pair has recovered more than 500 pips after falling 700 pips at the start of the month.
Source: Investinglive RSS Breaking News Feed
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