USD/JPY breaks through 107.50 barrier, hits 1-1/2 month tops

   •  Bulls defying subdued USD demand/sliding US bond yields.
   •  Fading safe-haven demand turns out to be a key driver. 

The USD/JPY pair finally managed to break through an important barrier near mid-107.00s and jumped to 1-1/2 month tops in the last hour.

After an initial dip to 107.20 level, the pair regained traction and built on overnight rebound from 1-week old trading range support, near the 106.65-60 region. 

Despite a subdued US Dollar price action and a modest retracement in the US Treasury bond yields, improving risk-appetite, which tends to weigh on the Japanese Yen's safe-haven appeal, was seen as one of the key factors driving the pair higher.

It would now be interesting to see if the pair is able to build on the possible bullish momentum or the up-move turns out to be a fake-out amid relatively thin US economic docket, featuring the second-tier release of Prelim UoM Consumer Sentiment and JOLTS Job Openings data.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “The bull flag breakout indicates the rally from the March 25 low of 104.63 has resumed and the spot could test supply around 110.00 - 110.35 (bull flag breakout as per the measured height method) over the next week or two.”