Bond Bloodbath Hands USD/JPY Bulls a Lifeline Amid Yen Strength

The recent surge in US Treasury yields has provided a lifeline for USD/JPY bulls, but their efforts have been overshadowed by record intervention and US support keeping yen strength intact.

A strongly supportive rates backdrop would normally be expected to drive gains for the dollar against the Japanese yen, but instead, the pair has fallen sharply over the past couple of weeks.

Looking back at comparable episodes, USD/JPY rose around four times out of five when US-Japan yield spreads widened at a historically rare pace. However, in this instance, the pair is down 2.7% over the same period.