Dollar printed a near six-month high against the Japanese yen at 138.88 in Asia trade, reflecting the stark contrast between a still-hawkish Federal Reserve and an ultra-dovish Bank of Japan.
USD/JPY could see much bigger gains if the U.S. debt ceiling impasse is resolved in the days ahead.
The U.S. Treasury Department reiterated Monday it expects to be able to pay the U.S. government's bills only through June 1 without a debt limit increase, leaving just 10 days for White House negotiators and congressional Republicans to reach a deal.
If an agreement is found, that would boost risk appetite that would in turn spark bigger flows out of the safe-haven yen.
USD/JPY's technical outlook retains a bullish tilt as fourteen-day momentum is positive.
There is potential for a break above the 139.58 Fibo, a 50% retrace of the 151.94-127.22 (October-January) EBS drop.
As EUR/JPY's 30- and 60-day log correlations with USD/JPY are above +0.6, expect the cross to continue to move in tandem with spot.
For more click on FXBUZ