However, the rally in the pair from 108.00 to 109.76 appears to be a trap. This is because the treasury yields were muted yesterday… despite the strong US data.
For example – The recent high of the 10-yr Treasury yield is 2.3% (Monday’s high). The yield revisited 2.29% today before falling back to 2.24%. Meanwhile, the Dollar-Yen pair rose from 108.00 to 109.76, which clearly states the move could be surrendered given the 10-yr yield failed near 2.3% today.
On the charts, we have a price divergence on the 4-hour chart, while the daily too has hit the overbought territory.
Thus a retreat to 108.00 appears more likely.