USD/JPY: Bears track downbeat US Treasury yields to target 108 amid off in Japan

• USD/JPY extends Wednesday’s pullback from two-week top, remains offered near intraday low.
• US Treasury yields remain depressed after Fed rejects talking tapering.
• US President Joe Biden’s speech will be the key amid Showa Day Holiday in Japan.

USD/JPY takes offers around 108.45, down 0.12% intraday, during Thursday’s Asian session. In doing so, the quote drops for the second consecutive day even as markets in Japan as off.

The reason could be traced to downbeat US Treasury yields that drag the US dollar index (DXY) to refresh a two-month low. Bond yields reversed the previous day from the highest since mid-April after the US Federal Reserve (Fed) repeated cautious optimism while matching the wide market expectation of no change to its current monetary policy. Also weighing on the T-Bond yields could be Fed Chair Jerome Powell’s press conference that sought more time before discussing the tapering.

Elsewhere, the coronavirus woes in Japan and India raise doubt over the global recovery hopes. Also challenging the market optimists are the uneven vaccinations and doubts over the key jabs, like the AstraZeneca.

Amid these plays, S&P 500 Futures gains 0.35% while the DXY drops 0.10% by the press time.

Moving on, a lack of major data/events at home highlights US President Joe Biden’s first address to the ‘joint Congress’. Although the early hints suggest further stimulus and keep markets hopeful, hardships for tax-hike plans and expectations of a tough stand in geopolitical issues may let the USD/JPY depressed.

It’s worth mentioning that the preliminary readings of the US first quarter (Q1) GDP will be the key to watch during today’s North American session.

Technical analysis

The USD/JPY pair’s U-turn from 21-day SMA, around 109.00 by the press time, directs the sellers toward an ascending support line from January 06 near 107.70.