Adds the word "bulls" in first sentence
USD/JPY bulls are getting another leg up as the 10-year U.S. bond yield climbs back above 3% today, widening the 10-year UST-JGB yield spread that has been underpinning spot.
The 30-day log correlation between USD/JPY and the spread has been since May 9 above +0.50, the threshold which means the two variables register a close in the same direction more often than not.
USD/JPY longs remain relatively small, but are nonetheless steadily building: IMM data for the week ending May 8 showed a futures market long of an equivalent cash USD/JPY position of 625 million.
USD/JPY bulls continue to build strength for an eventual break of recent 110.02/05 peaks, above which will pave the way to the 200-DMA at 110.17 and the key 110.24 Fibonacci level -- 61.8% retrace of the 113.75 to 104.56 fall.
A close above the 30-WMA at the end of the week, currently at 109.79, will strengthen the underlying bullish outlook.