USD/JPY retreats as US bonds yields pull back

The US dollar moved off daily highs across the board amid a recovery in US Government bonds. USD/JPY climbed earlier to 114.83, hitting a 6-day high and then retreated to 114.20. 

Near the end of the American session the pair was trading at 114.40, still up more than a hundred pips for the day, but modestly off highs. 

Back above key trendline 

A short-term downtrend line stands around 114.40. A consolidation on top, from a technical perspective, could remove strength out of the Japanese yen, signaling a potential end to the bearish correction that has been in place since the beginning of the year. On the flip side, if the price drops back under 114.40, the bearish tone in the pair could remain in place. 

Today’s US dollar rally pushed the price back to the levels it had a week ago. A potential double bottom formation around the 112.55 zone (Jan 18 & 24 low) might be in process. 

Yields bounce 

The greenback lost strength in the market after a slide in US bond yields. The 10-year yield declined from a 1-month high at 2.554% to 2.510% following a strong 7-year bond auction. 
In Wall Street, the Dow Jones was up 0.20% headed toward another record close; the Nasdaq was rising 0.06% while the S&P 500 was falling marginally 0.01%.

In the US, on Friday, the first estimate of 4Q GDP will be released (and also the durable goods orders and the Michigan consumer confidence report).