USD/JPY consolidates strong gains to two-month peaks

USD/JPY consolidates strong gains to two-month peaks

10 July 2017, 11:39
Roman Vashchilin

The USD/JPY pair held on to its gains beyond the 114.00 handle, albeit has retreated few pips from fresh two-month tops touched in the past hour. 

A modest pull-back in the US Treasury bond yields seems to be only factor failing to provide any fresh bullish impetus for the US Dollar and assist the pair in building on to its strong gains beyond May monthly highs resistance near 114.35-40 region.

   •  USD/JPY scope for a test of 114.35 – UOB

However, the prevalent risk-on environment, as depicted by strong gains in global equity markets, was seen weighing on the Japanese Yen's safe-haven appeal. This accompanied with today's dovish comments by the BoJ Governor Haruhiko Kuroda and prospects of additional Fed rate hike action this year remained supportive of the strong bid tone surrounding the major.

In absence of any major market moving economic releases from the US, broader market risk sentiment and the US bond yield dynamics would remain key determinants of the pair's movement at the start of a new trading week.

Technical levels to watch

A strong follow through buying interest beyond the 114.35-40 immediate resistance has the potential to continue boosting the pair further towards the key 115.00 psychological mark en-route its next major hurdle near 115.30-35 region.

On the downside, retracement back below the 114.00 handle, leading to a subsequent drop below the 113.70 level, could drag the pair back towards a short-term ascending trend-line resistance breakpoint, now turned support near 113.25-20 region.

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