Yen Underperforms Amid Higher Yields/Further Recovery In Equities

USD/JPY surged late in the Asia Pac session on Tuesday, moving back above 132.00, getting close to Monday session highs (132.60/65) before finishing just sub 132.50. This is where we currently sit, with a NY session dip sub 132.00 well supported. Yen was the worst performer within the G10 space for Tuesday's session, down 0.90% (closely followed by AUD and NZD losses).

• Key EMAs all sit higher, the closest being the 20-day near 133.94. The simple 50-day MA is close by though, around the 132.55 level.
• As we noted yesterday, the yen was outperforming the firmer US yield backdrop and recovery in global equities. These trends extended in the EU and US sessions through Tuesday, undermining yen. The 1 month USD/JPY risk reversal has moved off recent lows, last near -1.80.
• Still, the technical backdrop points to vulnerability in the pair, with sub 130.00 still a target. A move above the 20-day EMA is likely needed to entrench more bullish sentiment.
• EUR/JPY rallied just over 1.30% for Tuesday's session, the pair sitting around 142.65 currently. This cross sits close to the 50-day EMA. Recent dips in this pair sub 140.00 have been supported.
• Japan markets return from holiday today. Machine tool orders are out for Feb (final reading).