- The USD/JPY pair is very close to crossing the 110.00 mark.
- The risk reset as represented by the rise in the US-Japan 10-year yield spread, favors the USD/JPY bulls.
The USD/JPY pair clocked a high of 110.00 and could rise above the psychological hurdle in a convincing manner as the 10-year US-Japan bond yield spread is rising in favor of the USD bulls.
As of writing, the currency pair is trading at 109.97 and the spread between the US 10-year treasury yield and the 10-year yield on the Japanese government bonds (JGBs) stand at 289 basis points – the highest since May 25.
The rising yield spread represents a risk reset in the financial markets, hence anti-risk Japanese Yen could remain under pressure.
However, the Yen may pick up a bid, pushing the USD/JPY lower if the major European equity index and the US equities report losses.
USD/JPY Technical Level
Resistance: 110.18 (200-day moving average), 110.48 (Feb. 2 high), and 111.40 (May 21 high).
Support: 109.77 (session low), 109.38 (10-day moving average), and 108.82 (38.2% Fib R of March low – May high).
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