Yen Underperforms Risk rally, 155.00 Resistance Remains Intact

USD/JPY spent most of the Monday session drifting higher. The pair sits very close to Monday highs in early Tuesday dealing, last in the 154.80/85 region. This is fresh cycle highs in the pair but we didn't test 155.00 through US trade (there was a notable option expiry at the 155.00 level for NY cut).

• Yen lost 0.14% for Monday's session, which along with GBP and CHF, was an underperformer, particularly against higher beta FX. NZD and AUD were the top performers (both up around 0.50%) as risk appetite stabilized further in the equity space. The SPX rose just under 0.90%, while the Nasdaq rose 1.11%.
• In the US yield space, we moved away from intra-Monday highs, finishing slightly softer at the front end, US 2yr back to 4.97%. 10yr finished up just under 4.61%. US-JP yield differentials have tracked sideways in recent sessions, still close to multi month highs (10yr spread around +372bps), but not showing the same degree of upside momentum as the first part of April.
• We wrote last week that while the technical trend condition in USDJPY remains positive, the next phase of strength could be harder to come by without another major shift in Fed policy pricing, as positioning looks stretched and diplomatic blockers to potential intervention appear to peel away. Upside focus will be on 155.00, while on the downside, Apr 19 lows rest at 153.59, the 20-day EMA is back at 152.75.
• Locally today we have preliminary April PMIs on tap, while Friday delivers the BoJ outcome.
• In the option expiry space we have the following for NY cut later: Y153.00($1.3bln), Y155.00($770mln).