Amid thinner market conditions last week, the pair managed to hold a weekly close above 115.00 and is running with that so far to start the new year. The latest jump is largely helped by the surge higher in Treasury yields yesterday, which saw 10-year yields climbing by over 10 bps to 1.63%.

A stronger dollar across the board to kick start the year is also part of that but as things stand, the technicals may have more of a say here.

For now, keeping above the 22 November high @ 115.52 will be crucial for buyers. That will allow to keep the upside momentum going and to be honest, there isn't much in the way of a much stronger break higher. The next key resistance level sits closer to 118.00.

That said, be reminded that the bond market also needs to play ball in this scenario. As mentioned here, this chart for 10-year Treasury yields is pivotal in confirming any short-term breakout:

As such, the latest technical shove higher looks promising and could extend to 118.00. However, the caveat is that a break higher is also needed for Treasury yields in relation to the wedge pattern above.

The outlook for yields coming into this year is that it is likely to trend higher considering the Fed backdrop. It is early days but it looks to be some posturing already by market players. A technical break higher in 10-year yields will confirm that and in turn also bode well for USD/JPY buyers so that is the key spot to watch.