USDJPY made a stand near the lows in Asia and rallied smartly back to the 100 area. This is a nice local pattern reversal that should give the bulls encouragement, though we still have the critical zone of 100.00/60 that must be taken out to trigger the view toward the 103.70+ top.
Chart: USDJPY
The smart reversal helps the bulls' case and underlines the importance now of the local 99.50/00 support zone as the focus shifts on whether this pair can follow through higher after the recent break of the triangular consolidation that took months to form over the last several months. The local reversal encourages the upside view as long as we maintain the level above 99.50.Chart USDJPY versus US 10-year yield
USDJPY traders should also have an eye on US 10-year yields as a coincidence indicator. Yields heading higher would be supportive of USDJPY upside, while a strong bond rally could mean that the USDJPY rally is once again disappointed and results in further range trading or worse. Stay tuned.
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