USD/JPY trims gains to the 109.40 area

• Gains remain capped near 109.80.
• US 10-year yields near multi-year tops around 2.88%.
• USD retreats from highs.

The greenback keeps giving away initial gains vs. its Japanese counterpart and is now dragging USD/JPY to the 109.40 region.

USD/JPY upside limited near 109.80

Spot came under renewed selling pressure following daily highs in the 109.80 region along with a softer tone around the greenback.

The correction lower came in despite yields of the US 10-year note are climbing to fresh tops around 2.88%, at shouting distance from multi-year peaks recorded on Monday in the vicinity of 2.89%.

USD met extra sellers after Philly Fed P.Harker said he expects two rate hikes by the Federal Reserve throughout this year, although he remains open to an extra rate hike depending on inflation and financial conditions.

On the data front, US initial claims came in above expectations last week at 221K WoW.

USD/JPY levels to consider

As of writing the pair is gaining 0.06% at 109.45 and a breakout of 109.78 (high Feb.8) would expose 109.95 (21-day sma) and then 110.48 (high Feb.2). On the other hand, the next down barrier aligns at 108.46 (low Feb.6) seconded by 108.28 (2018 low Jan.26) and finally 108.11 (low Apr.17 2017).