USD/JPY rallies in tandem with treasury yields, reclaims 104

The USD/JPY pair extends its recovery from near 103.34 further into the early European trading, largely on the back resumption of broad based US dollar rally.

USD/JPY eyes 3-month tops

The bid tone behind the US dollar keeps growing bigger as we head into early Europe, now pushing USD/JPY further into the green zone above 104 handle.

The US dollar advance versus its main rivals gained traction after the treasury yields across the curve stormed higher, as a Dec Fed hike deal is almost sealed in by the markets.  

The pair is last seen exchanging hands at 104.08, having reached session tops at 104.14 last minutes  (+0.34%), while the 2-yr and 10-yr treasury  yields rally +2.95% and +1.60% respectively.

Further, stronger Chinese CPI data-driven risk-on market profile also provides extra leg to the recovery in the USD/JPY pair. Later today, Fedspeaks and US retail sales data are likely to grab a lot of attention in the American session.

USD/JPY Technical levels to watch 

In terms of technicals , the immediate resistance is located at 104.50 (psychological levels). A break above the last, the major could test 104.63 (3-month high) and 105 (round figure) beyond the last. While to the downside, the immediate support is seen at 103.82 (5-DMA), next at 103.52 (10-DMA) and below that at 103.00 (key support).