After an initial dip to session low near 109.60 region, the USD/JPY pair regained traction and continued scaling higher during European trading session.
Currently placed at session tops near mid-110.00s, the pair has now moved back to previous session’s two-week high level amid prevalent risk-on environment. The French election-led global risk-on trade, as depicted by a mildly positive trading sentiment around European equity markets, continues to fade the Japanese Yen’s safe-haven appeal.
Moreover, a follow through recovery move in the US treasury bond yields, with the benchmark 10-yr yield moving back above the key 2.30% mark, further collaborated to the pair up-move in the past hour or so.
It, however, remains to be seen if the pair is able to build on to the ongoing recovery move or once again runs through fresh supply amid uncertainty over Trump’s pro-growth economic policies and geopolitical tensions around the Korean peninsula.
Meanwhile, investors’ tendency to lighten to their positions on every up-move, heading into the BoJ monetary policy decision on Thursday, might also collaborate towards capping further up-move for the major.
Later during the day, the US economic releases that include – CB’s Consumer Confidence Index, New Home Sales data and Richmond Manufacturing Index, would now be looked upon for some fresh short-term trading impetus.
“A daily close above 110.45 would push RSI above the descending trend line; add credence to the bullish MACD and open doors for 111.58 levels” writes Omkar Godbole, Analyst and Editor at FXStreet.
“On the downside, a daily close below support at 109.48 (support offered by the trend line drawn from Mar 14 high and Apr 10 high) could yield a re-test of 108.13 (Apr 17 low) levels” he added.