I took a look at EURJPY 10 year and 2 year yield spread of German and Japan.
It appears that the rally is not supported by the yield spread; however, I read some news that USDJPY has decoupled from its spread along with AUDUSD , so I don't know what to think here about this. EURJPY's yield spread looks better than the yield spread of USDJPY and AUDUSD .
Reasons why AUDUSD and USDJPY has dislocated from their yield spreads:
(1) Due to the presence of other dominant drivers, currency pairs may not move necessarily in tune with the step of yield spreads: (a) changes in , (b) changes in underlying trade and/or exchange patterns (I guess this means imports, exports or a trade war), investor flows or basic balances.
(2) Another reason could be skepticism over Japan's yield curve control.
Yen speculators are net long the Yen for the first time since 2016: https://s3.amazonaws.com/tradingview/snapshots/r/R1dwEC6H.png
It looks the price has pullback into a weekly supply area.
Based on this analysis, I believe this is a good opportunity to buy JPY over several weeks, and sell other pairs. So, I have gone ahead and shorted this rally in EURJPY and USDJPY .
So, this is something I will start to check out.