After the US jobs report on Friday, it looked like USD/JPY was set for a break lower in a drop below the 145.00 mark. However, a major turnaround in the bond market helped to drive yields higher and was a saviour for USD/JPY buyers. The pair closed higher at the end of last week above 146.00 and is now in the hunt for a third straight day of gains.
This comes as Treasury yields are once again pushing higher, with the bond market returning to play after the long weekend. 10-year yields are up 5.1 bps to 4.224% currently and that is underpinning USD/JPY especially as the dollar itself is strongly bid across the board.
The pair is now closing in on the highs for the year with plenty of breathing room still from 145.00 to 150.00 at least from a technical perspective.
What is perhaps also helping buyers feel more confident is the lack of pushback from Japanese officials as of late. They're not really attempting to jawbone the yen, so that does free up some room to maneuver as bond yields continue to track higher.