The push higher is an extension of the momentum from last week, in holding a firm break above 116.00. Despite some risk woes, the pair is getting a boost from both the technical aspect and also a continued push higher in Treasury yields.

The latter is arguably a reflection of a market continuing to be worried about inflation. 10-year yields are now up another 4 bps today to 2.046%. That threatens a technical push above 2% for the week so keep an eye on that in the days ahead.

USDJPY W1 14-03

Going back to USD/JPY, the 118.00 level is a key area which could see gains stall unless there is a stronger catalyst for a breakout.

The highs five years ago around 118.61-66 will also be a key region to watch but as for the weekly close, it's all about the 118.00 level.

If buyers can sustain a meaningful break above that, 120.00 is the next psychological target before any further legs higher.

As for the fundamentals, it will be tough to consolidate everything at this stage. On the one hand, inflation worries are rising and that is reflected in bonds. But one has to also consider that China's lockdowns are part of that and that is a negative factor for the global economy. Then, there's also the whole Russia-Ukraine war which could turn ugly at any point.

The yen may look helpless in the past few sessions but headline and event risks could still jolt it back to life.