USD/JPY regains 111 handle as Nikkei, Treasury yields extend higher

A renewed bout of buying interest gripped the USD/JPY pair in the last hour, now pushing the major back towards daily highs above 111 handle.

USD/JPY: On its way to Monday’s high?

The dollar-yen pair ran through fresh buyers as risk-on wave hit the markets after the Japanese stocks jolted higher amid ongoing chatter surrounding sales tax hike.

Moreover, the US treasury yields continue to extend northwards as markets almost priced-in a June/July Fed rate hike, with the 2-year and 10-year yields on the US treasuries rocket +5.36% and +3.33% respectively. At the same time, USD/JPY trades at 111.09, having recovered most losses.

However, the upside lacks follow-through on the back of a broadly weaker US dollar, with the USD index now dropping -0.18% to 95.56 levels, as all eyes now remain on the US PCE price index and consumer confidence data among others, for fresh momentum on the major.

USD/JPY Technical levels to watch

In terms of technicals, the immediate resistance is located at 111.36/45 (April 5 & May 30 High). A break above the last, the major could test 111.91 (100-DMA). While to the downside, the immediate support is seen at 110.54 (5-DMA/ Daily low) and below that at 110.27/23 (daily S1/ 10-DMA).