USD/JPY closes in on 111.00, its highest since 6 July
The pair was already knocking on the door of a break higher earlier in the day and we’re starting to see that come around in European morning trade.
A daily close above the resistance region of 110.60-80 would be ideal but an even better position for buyers would naturally be a firm break above the 111.00 handle.
As things stand, the upside break in Treasury yields is likely toe extend further and that will keep yen pairs underpinned in general.
With 10-year yields potentially looking towards 1.60% or 1.70%, a push to retest the year’s highs for USD/JPY around 111.64-66 may just be the start before contesting the 2020 highs closer to 112.00.
That said, while Fed and inflation expectations are key drivers in the bond market at the moment, just be wary that global recovery/growth worries are also mounting with the energy crisis in Europe, UK, and China among the big issues at the moment.