• Japanese yen weakened amid higher equity prices and US yields.
• USD/JPY breaks short-term resistance at 113.80 and gains momentum.

The USD/JPY broke above 113.75 and climbed to 113.98, reaching the highest level since last Thursday. It is hovering near the highs supported by higher US yields.

Dollar gains ground versus European majors and JPY

The combination of higher US yields and an improvement in risk sentiment boosted the USD/JPY pair. The dollar is higher versus European majors, but not against emerging market and commodity currencies due to the improvement in risk appetite.

The US 10-year yield stands at 1.48%, the highest in a week while the 30-year is at 1.91%, up more than 3% so far on Tuesday. In Wall Street, the Dow Jones gains 0.85% and the Nasdaq rises by 0.37%.

The short-term technical outlook for USD/JPY now is biased to the upside after breaking the 113.75/80 resistance area. Now it is looking at the 114.00 area. Above the next level stands at 114.20 that is the last protection to last week top at 114.27.

A daily close above 114.40 would increase the odds of more gains ahead. On the flip side, under 113.20 the yen should strengthen.

Technical levels