USD/JPY hits six weeks highs above 139.00 despite risk aversion

• US dollar gains momentum despite another decline in Wall Street.
• Higher US yields keep the yen under pressure.
• USD/JPY approaches again the 140.00 zone.

The USD/JPY is gained momentum during the American session and climbed to 139.08, reaching the highest level since mid-July. The pair remains bullish amid a stronger US Dollar across the board.

The greenback rose sharply supported by higher US yields. The 10-year yields climbed to 3.14% while the 2-year rose to 3.49%. Bonds dropped even as US equities turned sharply lower. The Dow Jones drops by 0.89% and the Nasdaq falls by 1.25%.

Economic data in the US showed an improvement in Consumer Confidence with the CB index rising from 95.3 in July to 108.80 in August. The numbers helped the US dollar.

Earlier on Tuesday, Japan reported labor market data. The Unemployment rate held steady at 2.6%. While market participants still see possible a 75 basis points rate hike from the Federal Reserve, they expect the Bank of Japan to maintain its ultra-loose policy.

The divergence in monetary policy has been driving USD/JPY to the upside during 2022. If the pair holds above 139.00, the next level to watch is the multi-decade high at 139.38; and then attention would turn to 140.00. On the flip side, support levels might be located at 138.70, followed by 138.05 (daily low) and 137.65.

Technical levels