USD/JPY Surges as US Bond Yields Climb on Economic Optimism

The USD/JPY pair climbed on Thursday, July 24, 2025, tracking a rise in US Treasury yields, which share a well-established positive correlation with the pair. Closing at 146.99, up from 146.50, the pair hit a daily high of 147.00 and a low of 145.85. The uptick was fueled by a confluence of positive US economic developments, including stronger-than-expected labor market data and robust corporate earnings, alongside optimism surrounding recent trade agreements.

US Treasury yields for the 10-year note rose to 4.402% from 4.397%, peaking at 4.443% during Thursday’s session. This increase was driven by improved US jobless claims, which fell to 217,000 for the week ending July 19, signaling labor market strength. Strong earnings reports, particularly from major tech firms touting advancements in artificial intelligence, further boosted market sentiment. Additionally, a US-Japan trade deal imposing a 15% tariff on Japanese imports, with potential reductions for Japanese cars from 25%, lifted investor confidence. Hopes for a similar US-EU agreement, potentially capping tariffs at 15%, also contributed to the bullish mood, though the White House dismissed such talks as speculative.

The surge in yields reflects intense selling of US Treasury bonds, which inversely impacts their value and drives yields higher. This dynamic supported the dollar’s strength against the yen, pushing USD/JPY higher. As markets digest these developments, the pair’s trajectory remains tied to US economic indicators and trade policy progress, with investors eyeing upcoming data like US Durable Goods Orders and UK Retail Sales for further direction.