• the dollar / yen continued to rise above 127.50, reaching a 20-year high.

• differences between the Federal Reserve and the Bank of Japan boosted sentiment around US Treasury yields.

• daily RSI is extremely overbought, but bulls still refuse to give up.

The US dollar / yen traded near a 20-year high above 127.50, as market sentiment improved, supporting the demand for safe haven for the US dollar, while US Treasury yields took a breather.

Although U.S. interest rates fell from a three-year high, buying interest in the dollar / yen remained undiminished, as the divergence in monetary policy prospects between the Federal Reserve and the Bank of Japan (BoJ) continued to benefit dollar bulls.

In addition, the verbal intervention of Japanese officials failed to bring any comfort to the domestic currency, because their views on the impact of the continuous depreciation of the yen on the overall economy were contradictory. Looking ahead, in the absence of top economic data in the United States, the speech of charleseevans, President of the Chicago Fed, will receive attention.

Technically, the daily chart of the dollar / yen shows that the exchange rate is still expected to rebound further, especially after the Bulls broke through the previous day's upward trend line resistance level of 126.67. In other words, the currency pair may expand its rally to retest the 128.00 level.

Although the 14 day relative strength index (RSI) is extremely overbought, bulls still need to be cautious. If bulls succumb to overbought conditions, a pullback to the previous trend line resistance level and the current support level of 126.77 cannot be ruled out. 126.50 psychological level may save buyers.