USD/JPY Price Analysis: Stills around 20-year highs, as traders eye 135.00

• During the week, the USD/JPY is recording gains of almost 3%.
• A risk-off market mood has not been an excuse for the buck to keep trending higher, underpinned by elevated US Treasury yields.
• USD/JPY Price Forecast: To consolidate before resuming upwards.

The Japanese yen continues weakening against the greenback as USD buyers mount against the weakest currency in the G10, also weighed by higher US Treasury yields, widening the bond spread between both countries. At 134.42, the USD/JPY lurks at the 135.00 psychological level, which analysts and former Japanese policymakers mentioned could trigger intervention in the Forex market.

At the time of writing, the US 10-year Treasury yield sits at 3.00%, flat in the day. Meanwhile, the US Dollar Index, a gauge of the greenback’s value, rises 0.21%, currently at 102.545, a tailwind for the USD/JPY.

Sentiment-wise, Asian equity futures are mixed, with Japanese and Australian stock exchanges ready to open with losses. Chinese markets are poised for a higher open. Concerns about central banks tightening monetary policy might spur an economic slowdown loom.

On Wednesday, the USD/JPY opened near the session’s lows around 132.50 and rallied nonstop until the North American open, when it dipped towards 133.60, before resuming above 134.00.

The USD/JPY daily chart depicts the pair as upward biased, despite the parabolic upward move, from 126.86 to 134.40s, reaching a 20-year high. However, USD/JPY traders need to be aware that the last leg-up was printed on weaker momentum, as the Relative Strength Index (RSI) begins to show a negative divergence between the major’s price action and the oscillator. Therefore, the USD/JPY might pull back before resuming the uptrend.

That said, the USD/JPY first support would be the psychological 134.00 mark. Break below would expose the June 8 low at 132.54, followed by the May 9 high at 131.34.

Key Technical Levels

USD/JPY