USD/JPY jumps to three-week tops, eyes mid-110.00s ahead of US data
- USD/JPY gained strong traction on Wednesday and was supported by a combination of factors.
- The prevalent risk-on environment undermined the safe-haven JPY and provided a goodish lift.
- Rebounding US bond yields revived the USD demand and remained supportive of the move up.
- Technical buying above the 110.20-25 region contributed to the strong intraday positive move.
The USD/JPY pair added to its intraday gains and shot to near three-week tops, closer to mid-110.00s during the first half of the European session.
A combination of factors assisted the pair to build on the previous day's goodish bounce from multi-day lows, around the 109.60-55 region and gain strong positive traction on Wednesday. The prevalent risk-on mood was seen as a key factor that continued undermining demand for the safe-haven Japanese yen and acted as a tailwind for the USD/JPY pair.
Bulls further took cues from some follow-through uptick in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbed back to 1.33%. This, in turn, helped revive demand for the US dollar, which was seen as another factor that contributed to the USD/JPY pair's ongoing positive move to the highest level since August 13.
Apart from this, the uptick could further be attributed to some technical buying on a sustained breakthrough a two-week-old trading range resistance near the 110.20-25 region. Given that the USD/JPY pair has now confirmed a near-term bullish breakout, the stage seems set for a further appreciating move back towards August swing highs, around the 110.80 zone.
Moving ahead, traders might now take cues from the US economic docket – highlighting the releases of the ADP report on private-sector employment and ISM Manufacturing PMI. This, along with the US bond yields, might influence the USD price dynamics. Apart from this, the broader market risk sentiment might also provide some impetus to the USD/JPY pair.
Technical levels to watch