USD/JPY: headed to 115.00 on the back of yields spreads?

Currently, USD/JPY is trading at 114.34, down -0.04% on the day, having posted a daily high at 114.49 and low at 114.31.

Forex today: even more upside in the dollar and yields

USD/JPY has been consolidating the bid and offers have taken the yen up a notch vrs the greenback from 114.58 down to current lows meeting the hourly 20 sma at 114.33. The stock market gave back some gains and that has supported the Yen while in Asia, equity markets are subdued on the heels of Wall Streets performance.

Otherwise, the US dollar and US interest rates continued to rise on the back of hawkish Fed speak with US 10yr treasury yields rose from 2.45% to 2.50%, 2yr yields from 1.28% to 1.33% and the US dollar index higher by 0.4% in the lead up to the US close. This in contrast to JGB's at the lowest level since Nov 5th is a weight on the Yen as well for the day ahead.

Japanese government bonds: 5-yr yield hits lowest since November 2016

For the day ahead, we have Fed Chair Yellen's speech in Chicago and following all the hawkishness from the likes of Dudley, Williams and Brainard this week and with the March Fed decision coming up in next cupel of weeks, markets will be tuned in. We also have Fischer, Evans and Lacker who are also speaking at a monetary policy forum. Markit services PMI  and Feb ISM non-manufacturing index will be up as well.  From Japan today, Japanese inflation numbers for January (nation-wide) and February (Tokyo) saw a mixed-bag outcome.

Mixed inflation figures in Japan, Yen non-reactive

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet explained that the pair is clearly bullish according to the 4 hours chart, with technical indicators maintaining their bullish slopes and surpassing their previous highs within overbought territory. "In the same chart, the 100 and 200 SMAs have lost their bearish strength, and the shortest is getting closer to surpass the largest in the 113.20/40 region." She also explained that the pair is currently consolidating around the 23.6% retracement of the November/December rally, but faces a stronger resistance at 114.95, February's monthly high. "A clear break above it with a weekly close beyond 115.00 will open doors for a stronger recovery next week with 116.60 as the initial target, en route to 118.66, December high."