USDJPY advances towards 124.00 as the RSI (14) hit fresh highs at 79.50
pair maintained its offered tone heading into the North American session and was last seen trading around the 121.70-121.75 region, down nearly 0.50% for the day.The Bank of Japan provided a bullish signal on Friday and refrained from stepping into the markets to arrest the continuous rise in yields. In fact, the yield on the 10-year Japanese government bond rose above the level at which the offered to buy an unlimited amount in February.
Spot prices witnessed a dramatic intraday turnaround and plunged over 125 pips from the vicinity of mid-122.00s, or the highest level since December 2015 touched earlier this Friday. That said, a combination of factors assisted the USD/JPY pair to find decent support near the 121.20-121.15 region. and stall the intraday corrective pullback. The Fed-BoJ policy divergence, along with a positive risk tone acted as a headwind for the JPY.
Elevated US Treasury bond yields attracted some USD dip-buying and further contributed to limiting the downside for the USD/JPY pair, at least for the time being. The fundamental backdrop favours bullish traders, suggesting that Friday's downfall could be categorized as a corrective pullback amid extremely overbought conditions. Hence, any subsequent slide might still be seen as a buying opportunity and is more likely to remain limited.
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