USD/JPY keeps daily highs near 109.70, ISM on sight

• Spot in fresh 4-day tops around 109.70.
• US 10-year yields around 2.75%.
• US ISM next on tap.

USD/JPY is prolonging its weekly recovery and at the same time extending its recent breakout of the critical barrier at 109.00 the figure.

USD/JPY looks to US yields, ISM

Spot is up for the second session in a row so far on Thursday, coming up from last week’s multi-month lows in the 108.30 region (January 26) and always sustained by the solid momentum in yields of the key US-10 year reference, currently hovering over the 2.75% area.

In fact, yields in the US money markets have picked up extra momentum following the hawkish twist from the Federal Reserve at its meeting on Wednesday. It is worth mentioning that the Committee now sees further tightening as warranted, while investors see higher rates likely to be announced at the March, June and December meeting.

Ahead in the session, US ISM manufacturing will be the salient event seconded by the usual report on the labour market and Markit’s manufacturing PMI.

USD/JPY levels to consider

As of writing the pair is gaining 0.43% at 109.66 and a breakout of 109.78 (high Jan.26) would open the door to 110.70 (21-day sma) and finally 111.50 (high Jan.18). On the flip side, the next down barrier aligns at 108.28 (2018 low Jan.26) followed by 108.11 (low Apr.17 20170 and then 107.33 (low Sep.8).