The bar has been raised for the U.S. economy to lift USD/JPY.
Starting with Friday's jobs report, U.S. data will have to raise the ceiling on terminal Fed funds and long-term Treasury yields to overcome safe-haven yen buying, higher JGB yields and big USD/JPY resistance above 113.
Barring that, a pruning of recent IMM longs and another test of key 55-DMA support, last at 110.76, is likely.
Today's USD/JPY slide is an outlier among broader gains in the dollar, which is playing second fiddle to the yen in the flight to quality over renewed U.S.-China trade tensions. JGB bull curve steepening is adding to the effect.
With no sign China is willing to make huge concessions the U.S. wants, risk aversion and yen gains, particularly against EMs, should persist.
Though 10-year JGB yields were flat overnight, longer-term JGB yields continued to rise after the BOJ's curve steepening announced Tuesday nL4N1UT1G0.
Treasury note yields are again running into resistance above 3 percent because money markets are pricing a peak in the Fed's rate rising cycle next year, thus the need for strong U.S. data.