The Dollar – Yen is trading higher on early Tuesday as the prospect of a massive fiscal stimulus pushed US yields higher. The pair started the week strong as benchmark Treasury yields rose to 10- month highs on Monday as investors adapted for higher government spending under the President Joe Biden administration and before the Treasury will sell new long-dated supply.
Expectations of a multitrillion-dollar stimulus plan, the belief that the Federal Reserve will not push back on rising interest rates and new Treasury supply this week are helping yields to rise. Benchmark 10-year Treasury notes reached 1.138% on Monday, the highest since March 20. The yield curve between two-year and 10-year notes steepened to 99.9 basis points, the widest gap since July 2017.
In Essence, the widening of the spread between U.S. Government bond yields and Japanese Government bond yields are making the U.S. Dollar a more attractive asset than the Japanese Yen.
Yesterday, the USDJPY crossed above its 50 day moving average which is the clearest trend that exists on the 90 day timeframe. It shows price moving down over that time or to simplify this another way, note that out of the past 10 days USDJPY’s price has gone up 6 them.
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