USD/JPY is teasing a break above 110.00 as yield spread hits one-week high

• The USD/JPY pair is very close to crossing the 110.00 mark.
• The risk reset as represented by the rise in the US-Japan 10-year yield spread, favors the USD/JPY bulls.

The USD/JPY pair clocked a high of 110.00 and could rise above the psychological hurdle in a convincing manner as the 10-year US-Japan bond yield spread is rising in favor of the USD bulls.

As of writing, the currency pair is trading at 109.97 and the spread between the US 10-year treasury yield and the 10-year yield on the Japanese government bonds (JGBs) stand at 289 basis points - the highest since May 25.

The rising yield spread represents a risk reset in the financial markets, hence anti-risk Japanese Yen could remain under pressure.

However, the Yen may pick up a bid, pushing the USD/JPY lower if the major European equity index and the US equities report losses.

USD/JPY Technical Level

Resistance: 110.18 (200-day moving average), 110.48 (Feb. 2 high), and 111.40 (May 21 high).

Support: 109.77 (session low), 109.38 (10-day moving average), and 108.82 (38.2% Fib R of March low - May high).