I made the case for USD/JPY longs on Friday and it continues to unfold as hoped. The pair is up 162 pips to 132.46 today as it rises to a fresh session high.

The catalyst has been a steady rise in Treasury yields as banking worries fade. Every day that passes adds confidence that the banking crisis is over. Unless there's a fresh catalyst, then the outflow from deposit accounts is over and banks largely remain solvent. That doesn't fix the held-to-maturity problem but in time that problem will fix itself.

The other question for USD/JPY is the extent of what's priced in now. The initial thesis was that 2-year yields at 3.78% were too low but now they're up to 4.11% and the 100 bps of cuts that were priced in by year end have been pared down to 50 bps. There's no right answer to that question but there's momentum to the upside now and plenty of room for a recovery to 138.00 or close to it.

USDJPY daily chart March 29