US Yields on the move again. What does it mean for USD/JPY?
US 10 Year yields are up for the 6th consecutive day after news from China has led to optimism in the markets and, therefore, bond selling. Shanghai is up and running again in full force and restrictions are being lifted in Beijing. In addition, China said it will end an investigation into Didi (China’s version of Uber) and the app will soon be available again on mobile platforms. Bond traders took the view that the “the glass is half full” and sold bonds, pushing 10-year yields back above 3.00% to their highest levels since May 11th. Resistance is at the May 11th highs of 3.07%, and then the highs from May 9th at 3.07%. If yields break above there, they can move to the highs from November 2018 at 3.25%. If the resistance holds, yields can fall to support at the May 26th lows of 2.71%. Below there, the next support level is the 38.2% Fibonacci retracement level from the lows of March 7th to the highs of May 9th at 2.62%, then horizontal support at 2.56%. Notice on the bottom panel of the chart below that the correlation coefficient between US 10-year yields and USD/JPY has a strong positive correlation at +0.92. Readings above +0.80 are considered strong. Therefore, if US yields are to continue to move higher, USD/JPY should move higher as well.
Source: Tradingview, Stone X
Indeed, USD/JPY has been moving higher. On a daily timeframe, price formed a descending wedge pattern after the pair reached its highest level since April 2002 at 131.28 on May 9th. USD/JPY broke out of the descending wedge on May 31st after holding the 50 Day Moving Average support, and it hasn’t looked back. Today, USD/JPY took out the highs from May 9th and is banging up against horizontal resistance dating to February 2002 near 131.84. The next resistance levels are at the 127.2% and 161.8% Fibonacci extensions from the highs of May 9th to the lows of May 24th near 132.70 and 134.43, respectively. Above there, horizontal resistance from the highs of January 2002 cross at 135.16. If the resistance holds, support below isn’t until the 50 Day Moving Average at 127.52. The next support level is the top, downward sloping trendline from the descending wedge near 126.75, then the lows from May 24th at 126.36.
Source: Tradingview, Stone X
US 10-year yields and USD/JPY have a strong, positive correlation with a correlation coefficient of +0.92. Both have been moving aggressively higher, with USD/JPY reaching its highest level today since 2002! Will it continue to move higher? It may depend on what US bond traders decide to do!
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.
FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.
StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255
FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.
The statistical data and the awards received refer to the Global FOREX.com brand.
This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.
Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.
StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.
Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets
We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
© FOREX.COM 2025