USD/JPY jumps to highest since 2002 above 131.50

• US dollar rises across the board amid higher US yields. 
• USD/JPY extends gains to levels not seen in two decades. 
• Stocks trim gains on Wall Street; however, the yen remains under pressure. 

The USD/JPY broke above 130.80 and jumped to 131.68, reaching levels not seen since April 2002. The pair remains near the top, holding onto important daily gains. 

US Treasury yields wake up

The dollar rose across the board during the American session, ending hours of quiet trading. The DXY is up by 0.15% after trading most of the day in negative territory. The yen is among the worst performers. 

The key drivers in price action are US yields. Treasuries are falling sharply, with the 10-year yield reaching 3.04%, the highest since May 12. Stock in Wall Street moved off highs. The S&P is up by just 0.22% after opening with a gain of more than 1%. 

The Federal Reserve is likely to remain on its aggressive tightening path after Friday’s NFP. Job numbers came in slightly above expectations. The May CPI inflation report on Friday will be the highlight of the week of US data.  Due to the media blackout ahead of the June 14/15 FOCM meeting, there are no Fed speakers this week.

If yields continue to move higher, the USD/JPY will likely follow. The next target could be seen at the 132.00 area. On a long term perspective, the next critical level is the 2002 high at 135.16. A decline back under 130.70 should alleviate the bullish momentum, suggesting some exhaustion. 

Technical levels