News that Japan is planning retaliatory tariffs against the U.S. has failed to hinder USD/JPY bulls, partly because the market view these as more of a negotiating tactic on the part of Japan nL3N1SO140.
USD/JPY bulls remain in the driving seat as the 10-year U.S. bond yield continues to climb, widening the 10-year UST-JGB yield spread that has been underpinning spot.
The relationship (30-day log correlation) between USD/JPY and the spread has been since May 9 above +0.50, the threshold which means the two variables register a close in the same direction more often than not.
USD/JPY looks set to surge well above the key 110.85 Fibonacci level -- 61.8% retrace of the 114.73-104.56 (November to March) fall -- as the market has now registered two successive daily closes above the 200-DMA.
Japanese exporter offers seem to be tempering the rally, but a daily close above the 110.85 Fibonacci level should see gains accelerate.