U.S. Yields Continue To Underpin USD/JPY

The continued uptick in U.S. Tsy yields has supported USD/JPY during the early part of this week, leaving the rate 20 pips or so higher into London trade, printing just shy of Y111.20. The race to become leader of Japan's ruling LDP Party headlines the local docket this week, but it is the U.S. Tsy yield dynamic that will remain front and centre for the pair. This week's rally leaves bulls targeting the Jul 2 high & bull trigger (Y111.66), with the Mar 24 high located just above there (Y111.74). A clear breach of that resistance zone would open the way to the Feb 20 2020 high (Y112.23). Initial support comes in at the Sep 8 high (Y110.45). The Y110.40-50 zone presents $1.2bn of FX option expiries to be aware of at today's 10AM NY cut.