The pair traded to a high of 137.91 earlier today but is now hovering around 137.50 levels. It is still up 0.3% and more importantly, buyers are looking to secure a break above key resistance in the form of its 200-day moving average (blue line), seen at 137.41 currently.
Hold above that and the bias will turn more bullish for the pair but keep below, and sellers will have incentive to stay in the game.
For now, it is all down to the bond market and yesterday's reaction doesn't make it too easy to work things out. The short-end of the curve sold off and 2-year yields in the US jumped above 5%. However, the long-end was bid initially before turning late on with 10-year Treasury yields still keeping just below 4% for the time being.
The action there will remain a key driver of USD/JPY, as has been the case over the past few months. And these will be the factors that will impact the bond market as well as the dollar in the week(s) ahead.
Going back to USD/JPY, the technicals are suggesting that a firm break above the 200-day moving average noted above is likely to open the door towards 140.00 again next - with the 50.0 Fib retracement level of the swing lower since October sitting nearby at 139.58.
