The high today hit 135.17 and that just barely eclipses the 2002 high of 135.16. That marks the highest level that the pair has traded since 1998 (!).

As mentioned last week, it was very much a matter of time before we get here and now that we are.. what comes next for USD/JPY?

As yields continue to explode higher, it is tough to fight against the upside momentum in the pair. Even more so when you consider the technical implications and how little resistance there is on the way up. A push above 135.00 leaves little in the way of a jump towards the 1998 highs between the levels of 145.00 to near 148.00.

I'd pin the 140.00 mark as the next key point of resistance first but at this point, we're very much just picking at psychological levels.

It will be interesting to see how much more Japanese officials can tolerate before voicing a sterner warning to markets about the potential to intervene - which I still believe is some distance away.

For now, markets are rather focused on inflation running hot and fragmentation risks in the euro area will not help with keeping bond yields lower in general. That remains a tailwind for USD/JPY as we get things started on the new week, despite the more dour risk sentiment.