US Dollar Bounces on Treasury Buyback, But USD/JPY Still Under Pressure
The US Dollar (USD) has seen some recovery following the Treasury's announcement of a larger bond buyback, but the USD/JPY pair remains on the back foot. The pair trades around 153.50 after briefly falling below 153.00, its lowest level since February.
The US Treasury said it could buy back up to $6 billion of longer-dated debt on Thursday, above the previously indicated minimum of $4 billion per operation. This move pushed US Treasury yields higher, with the benchmark 10-year yield rising to around 4.85%, its highest level since November 2023.
However, expectations of faster Bank of Japan (BoJ) tightening are still fuelling the unwinding of Yen-funded carry trades and the repatriation of overseas funds, helping the Yen strengthen without fresh intervention.
Strategists at Scotiabank highlight that 'risk for the JPY remains firmly tilted to the upside' as market participants reassess sentiment and positioning. They note that recent price action leans toward support around 153, but on the topside, they expect resistance at 155, given its role in providing prior support.