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The earlier dip from the headline here sure didn’t last long as traders are still not convinced of any major policy pivot by the BOJ; to no one’s surprise really. And as the market mood picks up as Middle East fears subside, we are seeing a decent push higher in USD/JPY as yields are also nudging higher on the day.

USD/JPY hourly chart

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Ever since the BOJ intervention last week at 150.00, the pair has been consolidating somewhat with price action stretching sideways in between 148.30 and 149.40 mostly. As things stand, higher bond yields is something that is continuing to underpin the pair with 10-year Treasury yields also now up to 4.678% after having began the day with a gap lower at 4.628%.

Even though traders are not really pricing in an overly hawkish Fed, they are still relatively convinced that Powell & co. remain the only ones able to truly deliver somewhat on the higher rates for longer narrative. Alongside the waves of supply in Treasuries, that is helping to keep yields elevated and bolster dollar sentiment still.

And until something changes on that or unless the BOJ really does decide to turn the hawkish screw, it will be tough to try and keep down the upward momentum in USD/JPY for now.

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