USD/JPY is currently chipping away at the downward sloping (bearish) 10-week moving average (MA) at 110.57. 

The pair confirmed a symmetrical triangle breakout with a convincing move above 110.00 yesterday. Notably, the bullish continuation, as represented by the triangle breakout, is backed by an above-50 reading on the 14-day relative strength index (RSI). 

Further, the 5-day moving average (MA) is trending north and holding above the 10-day MA, indicating the path of least resistance is to the higher side. 

Even so, a convincing break above the bearish 10-week MA of 110.57 may remain elusive, as the RSI on the hourly chart is beginning to diverge in favor of the bears. The RSI on the 4-hour chart is also reporting overbought conditions with an above-70 print. 

Further, the symmetrical triangle breakout isn’t backed by yield differentials. 

The pair has gained close to 100 pips in the last 24 hours and 200 pips in the last 12 days. 

The 2-year US-Japan bond yield spread, however, is holding well at least 10 basis points below the high of 277 basis points seen on Jan. 28. The 10-year yield spread is also hovering well below the high of 277 basis points seen on Jan. 18. 

Add to that, the long-term bearish view put forward by the death cross – the bearish crossover between the 50- and 200-day MAs – and the probability of the pair reversing gains seen in the last 24 hours appears highs. Put simply, the 10-week MA hurdle is likely to remain intact and the psychological support of 110.00 could be put to test again. 

The pair, however, could make a move above 111.00 by NY close if the yield differentials spike in the USD-positive manner. 

Weekly chart

Daily chart

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