Yen Futures (black on top) / 10 Yr US Treasury Note Futures (green on bottom)

Daily

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Prepared by Jamie Saettele, CMT

Jamie - A relationship we've been closely watching for several months (from April and May); A new high in the 10 year note is most likely not going to be coincident with a new high in Yen (new low in USDJPY). This divergence will help in timing the next USDJPY long. The 10 year has closed at record highs for the last 5 weeks and the USDJPY is trying (it seems) to stabilize at support (see USDJPY chart below). Reward/risk favors USDJPY longs at this level.

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)

Daily

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Prepared by Jamie Saettele, CMT

Jamie - The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is at its highest level since January 2011. Having traded to 10218.99 this week, near term action is suggestive of a setback. Make no mistake, this camp is bullish but reward/risk for bulls is not favorable at the current juncture. Channel resistance also stands in the way of immediate bullish resumption. 10047-10076 is now support.

Euro / US Dollar

Daily

US_Treasury_Market_and_Yen_Tell_a_Story_body_eurusd.png,

Prepared by Jamie Saettele, CMT

Jamie - Former base channel supports are now resistance. The Monday pivot (12823) remains in place as the EURUSD has gone into free-fall the several days. Bulls have held 12500 so far but keep 12480 in mind if reached. Increasingly deteriorating sentiment probably needs to be relieved in the form of a correction, if even just sideways. 12724 is resistance.

British Pound / US Dollar

Daily

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Prepared by Jamie Saettele, CMT

Jamie -The GBPUSD has entered a zone that was congestion in March (15601-15746). A zone that was previously congestion will likely provoke a reaction. In other words, this is a good place for the GBPUSD to find a near term low. Near term structure is consistent with a correction towards 15845. 15730 and 15775 serve as interim resistance.

Australian Dollar / US Dollar

Daily

US_Treasury_Market_and_Yen_Tell_a_Story_body_audusd.png,

Prepared by Jamie Saettele, CMT

Jamie - The AUDUSD has cleanly broken below the trendline that extends off of the May 2010 and October 2011 lows as well as the downward sloping channel that defines the trend since the February top. Thegap left open from 11/28/11 at 9773 has been filled but focus remains on the November low at 9663. The bounce off of 9689 could be the beginning of a larger correction towards 9934 and maybe 10020. There is no way to know ahead of time but reward/risk does not favor bears here. By the same token, there is nothing wrong with trading a reversal but doing so requires adherence to strict risk management (USE STOPS). The ideal trade will probably be shorting in early June at slightly higher levels (9970-10020).

US Dollar / Japanese Yen

Daily Bars

US_Treasury_Market_and_Yen_Tell_a_Story_body_usdjpy.png,

Prepared by Jamie Saettele, CMT

Jamie - After several days at the 61.8% retracement of the rally from the February low, the USDJPY has rallied impressively and is again contending with the 20 day average and trendline resistance. Above 8055 would break the series of lower highs since the March top and shift focus to 8180. I like jumping the gun on longs with a stop under 7900.

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com

To contact Jamie e-mail jsaettele@dailyfx.com. Follow him on Twitter @JamieSaettele