Analysts at Brown Brothers Harriman noted and explained that the US 10-year premium over Japan fell to about 210 bp from over 250 bp before the FOMC rate hike in March.
“That move seems over or nearly so. The German premium over Japan has moved between about 15 bp and 40 bp three times this year. It is on its third push lower and is a little below 20 bp now. This is the lowest since April 18.
The dollar needs to get a foothold above JPY110.70 to be of technical significance. Today it has stalled in front of JPY110.40, the 50% retracement of the latest leg down that began on June 2 near JPY111.70. The euro rallied against the yen from mid-April (~JPY114.85) to mid-May (~125.80). The technical tone does not look as favorable as the dollar. It appeared to have rolled over but recovered smartly from yesterday low near JPY122.60.”