10-year Treasury yields now down by more than 3 bps to 1.903%
But USD/JPY is still seen somewhat steady around 109.10 despite yields tracking lower on the session. The overall risk mood remains more cautious/defensive but yet, yen pairs are less affected by that today.
So, what gives?
There are a couple of potential factors toying with price action in USD/JPY today so let's try and figure this out. Firstly, price is sitting close to the 109.00 handle and is trapped between the 100-hour MA @ 109.15 and the 200-hour MA @ 108.91.
That means the near-term bias in the pair remains more neutral as buyers and sellers continue to lean on these levels to try and gain some control.
Secondly, there's also the issue of large expiries rolling off over the next two days as I highlighted earlier here. Notably, we have:
109.75 ($1.0 billion, today), 109.00 ($797 million, tomorrow), 109.25 ($1.3 billion, tomorrow), 110.00 ($1.5 billion, tomorrow)
That is perhaps what is also helping to keep price slightly more elevated for now just above the 109.00 handle.
All that being said, with yields continuing to track lower, just be mindful that if the risk mood turns more sour, traders may start to price in such sentiment into yen pairs eventually. As such, with equities and bonds hinting at a bit of a risk-off move, we could see some catch up in the yen later in the trading day.
Update: 10-year yields now down by 3.7 bps to 1.898%.
