124.14 is the level to watch
The break of the 2007 high in USD/JPY in Asian trading put the pair at the best level since 2002. Ryan took a look at the long-term levels and had some spot-on comments. For me, it's all about the near-term market at the moment. Trading is solid with the US dollar broadly bid and another leg of strength could come at any time.
The close will be critical and it's not enough to finish a handful of pips above 124.14; you'd like to see at least 124.50 to be confident it's not a false breakout but I'm struggling to see it. There is a $3.4B, 125 USD/JPY expiry on June 22 so look for offers there.
What's next?
It's been the breakout I've been waiting for in USD/JPY but it won't continue in a straight line. The enthusiasm after the break of the 2007 high hasn't been what you'd hope for. That's a signal for a small retracement but the trade is to buy the dips, not try to pick a top.
There's nothing saying we can't go all the way back to 122.10 before the next rally (it will come if Japanese officials mention worries about yen weakness) but I'd look at 123.00 as a spot to start scaling in.
