- USD/JPY is currently testing the trendline trending south from April highs.
- The pair has gained more than 350 pips over the last two weeks, possibly tracking the rise in Treasury yields.
USD/JPY is bid for the fourth straight day and is currently chipping away at the resistance of the trendline connecting April 24 and Aug. 1 highs.
As of writing, the trendline resistance is seen at 108.03.
A daily close above the trendline would bolster the bullish setup represented by the ascending 5- and 10-day moving averages and higher highs, higher lows pattern. Also, the 14-day relative strength index is reporting bullish condition with an above-50 print. The indicator is currently seen at 63.00, the highest level since March.
It is worth noting that the pair is currently up more than 350 pips from the low of 104.45 seen on Aug. 26.
The rise could be associated with the US 10-year treasury yield’s recovery from 1.42% to 1.76% (Asian session high).
So, an upside break of the trendline, if any, could be short-lived if the bullish move is not backed by a further uptick in treasury yields. That said, the bullish outlook would be neutralized if and when the pair closes below the 10-day MA, currently at 106.92.