USD/JPY: Move in US Yields & Risk Hints Bullish Continuation

The rate has been trading on an upward trajectory this week, and Tuesday's price action constitutes yet further evidence that the trend is set to continue based on the increase in the US vs JP bond yield spread (red line in the chart) and the recent re-emergence in risk appetite, as one can notice via our prop risk index (black line).

Last Friday's increase in wages in the US served as a precursor of the positive augurs one should be expecting on the release of the US CPI on Thursday, with today's US PPI another clue that will be closely followed. As the market mood stance, barring any shocker via Brexit or trade-related headlines, the market is certainly shaping up for a potential extension in the exchange rate.

Indications of the bullish stance in the pair not only include the bullish structure via the sequences of higher highs and higher lows, but Tuesday's POC trapped lower at 111.40 or the fact that the market managed to find equilibrium above the upside breakout point, suggesting that in terms of price discovery, the market agree on higher levels without much reprieve from sellers as the environment in the last 24h remains unsupportive.