USD/JPY retreats from highs near 113.80

The offered bias around the Japanese Yen stays unabated at the beginning of the week, with USD/JPY coming down from 113.80 area to the current mid-113.00s.

USD/JPY attention to US yields

The pair has started the week on a positive note backed by a small recovery of yields in the US money markets, where the 10-year reference is now hovering over the 2.33% area after a brief test to 2.34% during early trade.

Recent disappointing results from US inflation figures and Retail Sales have removed tailwinds from the USD rally and somewhat alleviated the upside pressure on the probability of a rate hike by the Federal Reserve at the June meeting.

Currently, CME Group’s FedWatch tool is pricing the likeliness of higher rates next month at nearly 80%, always based on Fed Funds futures prices.

Data wise this week, the salient events will be Japanese inflation figures due on Friday, while the Philly Fed index is expected on Thursday.

USD/JPY levels to consider

As of writing the pair is advancing 0.11% at 113.50 facing the next up barrier at 113.97 (high May 12) seconded by 114.39 (high May 11) and finally 115.51 (high Mar.10). On the other hand, a breach of 112.98 (100-day sma) would aim for 112.91 (23.6% Fibo of 108.11-114.39) and then 111.99 (38.2% Fibo of 108.11-114.39).