USD/JPY: Off 3.5-month high, but holds above 200-day MA

• USD/JPY has backed off from 110.45 (3.5-month high), possibly due to a pullback in the treasury yields.
• However, the pair remains the bullish territory - above 200-day MA.

The USD/JPY pair hit a session low of 110.20 and was last seen trading at 110.28 - down 0.16 percent from the overnight high of 110.45 (highest level since Feb. 2).

The pullback could be associated with the 10-year treasury yield's retreat from 3.095 percent to 3.06 percent. Also, the Yen may have picked up a bid tracking the moderate losses in the major Asian stocks.

Whatever the reason, the retreat from the 3.5-month high should not be a cause of worry for the dollar bulls, given the 10-year treasury yield looks set to rise further towards 3.5 percent in the near future. Further, the USD/JPY closed above the 200-day moving average (MA) yesterday, signaling a continuation of the rally from the March low of 104.63.

The spot may regain bid tone if the US housing starts, building permits and industrial production figures due later today beat expectations by a big margin.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik sees resistance at 110.45, 110.90 and 111.20. Meanwhile, support is lined up at 110.00, 109.60, and 109.25.