USD/JPY set to test the year high at 116.35 while above 115.00 – OCBC

USD/JPY capitalized on rising US Treasury bond yields last week and climbed above 115.00. Above here, the pair could target the year high of 116.35, economists at OCBC bank report.

Stay positive

“The correlation between USD/JPY and front-end yield differentials has been improving as of late last week, especially as the overall market sentiment appeared to stabilize with equities. This should imply more upside room for the pair as yield differentials have opened up quite significantly of late.”

“Should the pair hold above 115.00, the risk-reward favours a test of the previous peak at 115.68 and potentially the year-high at 116.35.”