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USD/JPY jumps above 111.00 as the 10-year treasury yield trades at 2-week high

USD/JPY jumps above 111.00 as the 10-year treasury yield trades at 2-week high

USD/JPY chewed through resistance at 110.62 (23.6% fib retracement of 118.66-108.13) in the North American session and rose to 111.24 in Asia as risk-on rally in the US pushed the 10-year yield to a 2-week high of 2.343%.

NASDAQ closes above 6,000 for the first time

There is no stopping the stock market bulls. Dow jumped 200 points and the NASDAQ closed above 6000 for the first time ever. S&P 500 is near its all time highs as well.

Big names like Caterpillar, DuPont, McDonald’s Corp topped the analysts’ expectations, thus adding fuel to the ‘macron rally’. This reduced the demand for the safe haven treasuries and pushed the 10-year yield above the critical technical resistance of 2.31%.

The Dollar-Yen followed suit and remains well bid in Asia around 111.20 levels. The 10-year yield currently trades around 2.34%. The rally in the risk assets looks set to continue with Trump expected to unveil the outline of the tax plan later today, which will include a cut in corporate tax from 30% to 15%.

Bullish outside day candle

The daily chart of the USD/JPY pair shows a bullish outside day candle, a pattern that suggests continuation of the rally.

USD/JPY Technical Levels

A break above 111.58 (Apr 10 high) would expose stiff resistance at 111.60 (Feb low). A violation there could see the spot test supply around 112.15 (38.2% fib of 118.66-108.13).

On the downside, support is seen at 110.62 (23.6% fib of 118.66-108.13) and 110.09 (Apr 7 low). Only a daily close below 109.59 (previous day’s low) would signal bullish invalidation.