The 10 year bond is in rally mode. And although up against some key resistance, the flag pattern points much higher.

As a currency trader this matters to me since I am short USD/JPY and we are just 20 pips from critical support.

As you can see in this chart, if bonds rally and yields fall, the USD/JPY (yellow line) is likely to trade south as well. There is a very strong iverse relationship with the two instruments.

Blake Morrow

Chief Currency Strategist

Disclaimer: I have been short USD/JPY for many weeks and may add to my existing position