Second day in a row that USDJPY is up as risk assets continue to rise but yields remain depressed. The pair has been so grossly oversold that some sort of rebound was due but for now the 106.00 figure remains formidable resistance.

Tomorrow the market will get a look at the final revision of US GDP which is expected to come in at 2.7% versus 2.5% original forecast. If the number meets or better yet rises towards the 3.0% level the upside in USDJPY could be substantial. Faster than expected growth in Q4 would suggest that 2018 growth could approach 3% and therefore push US 10 year yields above the key 3% mark. All of that would be positive for USDJPY and the pair could run as high as 107.00 as short covering flows kick in.

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