The question about the breakout is, in what way will it be?
As it stands, the bond market sends some form of message that needs to be heeded. The flattening of the yield curve is in itself worrying. This suggests that if the Fed adopts a faster pace of tightening, it could be a policy error and negatively impact economic growth. However, actions may differ, making it difficult for the Fed to follow the line.
Given the circumstances, even a more hawkish Fed (at least in view of three rate hikes next year) may not be enough to convince the bond market to avoid a further flattening of the curve.
This may be enough to keep the dollar high in general. But against the yen, the gains may not be easy to obtain if bond buyers lower long-term yields in stride.
Holding above trendline support just above 1.35% will be key in this direction.
There are certainly reasons for yields to gain ground to push higher on a more hawkish Fed, but again, there is also an argument for the opposite, as noted above.
This will make it difficult to navigate after the FOMC.
However, you can always go back to the map to try to figure things out. And I think this could be one of those times when the bond market continues to do some soul searching. As for other asset classes, it is best to remember that there is the old adage that the bond market is always right.