USD/JPY's recovery from Friday's non-farm payrolls dive stalled for again right where sell stops were triggered on the jobs data below 111.48 nL1N2100F3, and risk markets now hold the key.
Prices have been grinding higher, with slightly higher lows encouraged by recovering risk-on flows and lingering demand for relatively high-yield Treasuries.
There hasn't been much of a bounce in U.S. yields, but S&Ps are back by this year's 2,817 high and nearby October and December peaks.
A breakout above those highs would signal an extension of this year's post-flash crash rally.
But global markets have to determine whether recoveries in higher risk assets this year have already priced in the best-case economic scenarios, including the Fed and ECB shifts away from tightening, U.S. trade deals with China and the EU and a benign outcome of a now likely Brexit extension.
With all that in the balance, USD/JPY will struggle with its 112.13 March high by 76.4 percent of the 2018-19 decline at 112.08.
If economic developments don't support this year's risk-on rise, USD/JPY will suffer because the BOJ has far less room to lower rates than the Fed nL1N20Z0MZ.
A close above 111.50 is needed to reassure traders that risk-on flows are sufficient to retest 2019's 113.13 high.