USD/JPY rallies hard in tandem with T-yields, 110.50 closer

The bid tone around the US dollar keeps growing bigger as we head towards the European opening bells, prompting USD/JPY to print fresh daily tops near 110.40 levels.

USD/JPY headed to 10-DMA at 110.43

The bulls extend control for the third straight session, as the Japanese currency continues to face bearish pressure on improved risk conditions, after geopolitical tensions surrounding the US and North Korea somewhat eased. According to the latest Wall Street Journal (WSJ) headlines, North Korea has decided not to launch a threatened missile attack on Guam.

The spot also finds support from risk-on rally in Asian equities and positive oil prices, while the main driver behind the persisting USD/JPY rally remains the strengthening Treasury yields, which are up +1.16% to +1.67% across the curve.

Looking ahead, the USD/JPY pair will closely track Treasury yields, as markets gear up for the US retail sales release due later in the NA session.

USD/JPY Technical levels                 

To the topside, a daily close above 10-DMA located at 110.43 would shift risk in favor of a re-test of 111 (round number) beyond which 111.51/62 (100 & 50-DMA) would be back on sight. A break below 109.70 (daily pivot) would open doors for 109.57 (5-DMA). A break lower would yield a test of 109 (key support).