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Bullish USD/JPY The election of Donald Trump catapulted USD/JPY through another resistance level, this time a weekly trend line, adding to the list of technical signals that USD/JPY has bottomed and is in an uptrend. We began discussing a bottom in our September 5 and September 18 Technical Advantage reports. We estimate technical upside and resistance in the area of 112. We also think this uptrend has the potential to reach the full measured move target of 116.50 in 2017. Chart 80: USD/JPY weekly chart @USD-JPY X-RATE - Last Price | BSMAVG (50) on Close 108.71 BSMAVG (200) on Close 108.47 0,0%( 125.86) F125 -120 100,0%( 116.48) pls 50.0%( 100.60) any Major Support 100.0%(75.35) USDIPY MIMACD(12,26) -0.6488 MSig(9) -1.6916 EL Diff TH428 -_ 4.00 : A 2.00 a fll = — _— ng ART Tas pow INNA eeteest gy ssazryyatarenenneee Mtn. see cert nnant DEN. ama =" peyengyeune=—~ena nl 0.00 —s _ et -2,00 ullish cross -4.00 A. | USDIPY MRSI 57.8881 (0B 70.00 10S 39-00 | Wry f\ J a \ . 80 2011 2012 2013 2014 2015 2016 2017 Source: BofA Merrill Lynch Global Research, Bloomberg A higher yield environment We continue to think yields will trend higher in 2017. We initially reported our view that global yields would rise in our October 26 Technical Advantage report. Since then we have seen added confirmation by US 10y, US 30y, 10yr bund, 30yr JGB and 10y Gilt that yields will rise. US 10y and 30y yield form wedge bottom pattern US 10y and 30y yields formed wedge bottom patterns by breaking through the upper trend line resistance (Breakout 1). A wedge pattern is composed of two converging trend lines often consisting of multiple smaller trends followed by a breakout. Each yield has a second resistant trend line and Fibonacci retracement to break. If 10y yield breaks through 2.35% and 30y yield through 3.15%, then another breakout will have occurred that technically triggers another leg higher to 2.98% and 3.80%, respectively. We think this is the more likely outcome. BankofAmerica <2” 48 Global Rates, FX & EM 2017 Year Ahead | 16 November 2016 Merrill Lynch HOUSE_OVERSIGHT_014778