It's looking like buyers are poised to push towards a retest of last week's high around 136.70 as the yen slips again in trading this week. The better risk mood and higher Treasury yields are underpinning the pair, with a climb from around 135.30 in Asia trading to 135.95 at the moment.

Nothing has really changed in the big picture outlook for the pair as policy divergence continues to play a fundamental role in driving price action higher since the break of 120.00 in March. The fact that the BOJ is still refusing to throw in the towel on easy policy will just continue to keep the pressure on the yen in general.

And higher bond yields will not help with that as they continue to throw the kitchen sink at trying to defend their yield curve control policy.

One threat to a further jump in USD/JPY is that if the bond market doesn't play ball and that would require a repricing of the Fed's policy outlook. While the terminal rate pricing has come down, policymakers aren't shying away from rate hikes yet and that should be enough to also keep the selling pressure on bonds.

The other big threat will be risk of intervention by Japanese authorities but again, that isn't likely until we get to 140.00 or perhaps even higher, with the velocity of the climb likely to be the more important factor instead.

Looking at other yen pairs, it is still very much sunny skies for CHF/JPY as it breaches 142.00 today.