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The break of 110 produced heavy 2-way traffic, leaving the near-term outlook in the balance. According to economists at Westpac, a multi-week test of USD/JPY 112.50 is likely to require renewed UST yield upswing.

Specs load up on USD/JPY as 110 breaks

“Since January 2021, the sharp rise in US yields and accompanying broad-US$ rally have been enough to reverse the nine-month USD/JPY downtrend. Leveraged funds are getting on board, with their most bullish USD/JPY stance since Jan 2019. The 110 level gave way on 30 March for the first time in 12 months. But it took multiple attempts and the subsequent slip back below the figure suggests some consolidation near-term.”

“A test of 112.50 remains possible later in Q2 if US yields swing higher once again.”