Treasury yields surged after U.S. data showed economic growth was stronger than expected in the fourth quarter, helping to drive up USD/JPY demand nL3N20O1O2, nUSNSDEFQK.
There is a significant relationship between 10-year JGB-UST spread and USD/JPY: The 30-day (log) correlation is currently at +0.56, meaning as the spread widens, USD/JPY rises.
From a technical standpoint, USD/JPY registered a daily close above the 200-DMA, now at 111.34, for the first time since the end of December 2018.
That will give USD/JPY bulls a boost at the beginning of March, meaning the 112.08 Fibonacci level, a 76.4 percent of the 114.53 to 104.10 (October to January) drop.
A daily close above the 112.08 Fibo could see the market rise to test the 113.00 level.