If you go by the chart, the break higher yesterday was a significant one for USD/JPY as it clears its 100-day moving average (red line) to push above 148.00. The key technical level is seen at 147.44, so keep above that and buyers will remain poised to extend the upside momentum in the pair from this week.
USD/JPY vs US Treasury 10-year yields (%) daily chart
Part of the catalyst for the move was also a jump higher in Treasury yields after the stronger US retail sales data yesterday. Of note, 10-year yields pushed above its own 200-day moving average of 4.085% but is now barely sitting just above that at 4.090% on the day.
If USD/JPY is to keep the technical break from yesterday, it needs validation from the bond market and it doesn’t come any bigger from the technical conundrum above for 10-year yields. There has to be follow through selling in Treasuries to reaffirm the dollar strength that we have seen this week.
So, while USD/JPY looks to have carved out a technical path towards 150.00 next, it isn’t that straightforward.
There will be minor US data on the cards today and tomorrow that could still influence the pair and yields a fair bit. However, it’s all about the technicals now I would say.
Also, keep in mind that the BOJ policy meeting this month is just around the corner on Tuesday next week. That will add a key consideration for traders in chasing any moves over the next few sessions.