USD/JPY dipped below 155.0 on Monday amid a surge in Japanese 10-year bond yields, but rebounded as markets digested hawkish comments from BoJ Governor Ueda, ING's FX analyst Francesco Pesole notes.

JGB yields spike before partial retreat

"Part of yesterday’s market instability was driven by a bond market selloff in Japan following hawkish comments by BoJ Governor Kazuo Ueda. After yesterday's spike in 10-year JGBs yields by around 6bp, this morning we see some calming and a decline of almost 3bp from the highs, and pricing for a December hike is 20bp."

"USD/JPY briefly traded below 155.0 yesterday before the USD rebound: we think conditions for a new break lower this week are all there unless we hear some softening of the hawkish tone by Ueda or other officials."