USD/JPY: A rally towards the 110.00 level is on the cards – OCBC

The  USD/JPY trades above the 108.00 resistance as the pair runs higher narrowly on UST-JGB yield differentials, and this leaves scope of pull-back if UST yields retrace after Nonfarm payrolls (13:30 GMT), Terence Wu, FX Strategists at OCBC Bank, reports.

Key quotes

“The USD/JPY rise extended to 108.00 before pausing, as higher UST back-end yields support. This has brought the pair way higher beyond the usual confidence intervals on the short-term implied valuations.” 

“Expect yield differential dynamics to continue being the driver for now.” 

“Support moves higher to 107.20/30, against resistance at 1.1820.”

“If the pair can stay sustained to close the week, a march towards 110.00 cannot be ruled out.”