The Japanese yen continues its good form with USD/JPY being dragged to fresh lows in over nine weeks. The pair is down another 100 pips today in a fall angling towards the 130.00 mark with the 100-day moving average at 130.20 also a focus point at the moment:

As highlighted previously, the bond market continues to be the key driver here with a technical breakdown in 10-year Treasury yields a trigger point for yen gains in the past week:

Depending on how you look at it, yields could fall either towards the region of 2.00% to 2.10% (measured target of a head-and-shoulders pattern formation) or at least the 200-day moving average (blue line) at 2.26% currently. But either way, the message is that yields look to have the propensity to drop further – at least from a technical perspective.

In any case, the ongoing US-China rhetoric surrounding Pelosi’s visit to Taiwan is also likely exacerbating safety flows into bonds this week. That will keep the yen underpinned as such.

Elsewhere, the aussie is also a laggard on the day after the RBA produced a subtle shift in its latest forward guidance – perhaps hinting at a slower pace of rate hikes moving forward. AUD/USD dropped from 0.7015 to 0.6955 and is holding at the lows, down 0.9% on the day.

Looking ahead, there won’t be much in Europe to change up the narratives as all eyes today will be on how things play out between US and China with regards to Pelosi’s visit to Taiwan later in the day.