USD/JPY adds 20 pips in Asia as T-yields rise

• Treasury yields lift USD.
• USD/JPY runs into 5-day MA hurdle.
• Increased likelihood that US tax bill will be passed this week.

A minor uptick in the US 10-year treasury yield in Asia has put a mild bid under the greenback and has lifted the USD/JPY pair higher to 112.76 (5-day MA).

The pair was last seen attempting a break above the 5-day MA hurdle and the 10-year treasury yield was up 2.65 basis points at 2.369 percent (Friday's close was 2.344 percent).

Pushing the yields and the USD higher this Monday morning is the increased odds of the US tax bill being passed by the end of this week.

Still, the downward sloping 5-day MA is proving a tough nut to crack, seemingly due to the upbeat Japanese data released today. The Bank of Japan (BOJ) Tankan survey released today showed Japanese companies expect consumer prices to rise an average 0.8 percent a year from now vs 0.7 percent three months ago. Also, Japan reported export growth for the record twelfth straight month.

Ahead in the day, the bid tone around the USD could strengthen further if the treasury yields extend the Asian session gains. The data calendar is light, thus spot remains at the mercy of US tax reform optimism.

USD/JPY Technical Levels

Jim Langlands from FX Charts prefers buying USD/JPY into weakness. He writes, "although the daily charts remain neutral, the short term momentum indicators point higher at the start of the week and if 112.75/85 can be overcome we could then see a return to 113.00 and above, where 113.20/25 should see sellers ahead of the December high of 113.75.

Dips could see a run back to 112.00/20 but buying into short term weakness currently seems to be the plan, with a tight SL placed below 111.90

Buy US$Jpy @ 112.20. SL @ 111.85, TP @ 113.25