The yen continues to implode as traders are using the US CPI data this week as a catalyst for a push higher in USD/JPY once again. It’s not a perfect excuse but the timing fits as the data mainly reaffirmed that the ongoing narrative over the past two to three months is very well vindicated still at this stage.

That is enough to give USD/JPY another boost after weeks of a struggle to shake off a firm break above 135.00.

The push higher in Treasury yields today is also helping, with 10-year yields up 8 bps to 2.985% on the day. As much as there was a negative reaction for yields yesterday, it is hard to imagine a material climb down in rates so long as the market focus remains on a more aggressive Fed.

We may have seen a peak in yields already but a reversal of the trend is still something that may be a bit of a reach, unless traders start to turn their attention towards rate cuts and more material risks of a recession in the months ahead.

Either way, the technicals continue to do the talking – much better than Japanese authorities – in USD/JPY and 140.00 beckons now as price trades above 139.00 to its highest in over two decades.

This article was written by Justin Low at www.forexlive.com.