- USD / JPY gained momentum on Wednesday and was supported by a combination of factors.
- Tone of optimism in the markets plays against the yen.
- The rally in US bond yields revived demand for the dollar and continued to support the bullish move in USD / JPY.
The USD / JPY extended the bullish run and climbed to nearly three-week highs near 110.50 on Wednesday, prior to the release of important US data.
A combination of factors helped the pair take advantage of the previous day’s good rebound from multi-day lows around the 109.60-55 region and gain strong positive traction on Wednesday. The positive mood in equity markets was seen as a key factor that continued to undermine demand for the yen. and it acted as a headwind for USD / JPY.
Another contributing factor was the rebound in US Treasury yields In fact, the benchmark 10-year US government bond yield rose again to 1.33%. Apart from this, the rally could also be attributed to some technical buying on a sustained advance over a two-week resistance near the 110.20-25 region. Given that the pair has confirmed a short-term bullish breakout, the scenario looks set for a further move towards the recent August highs, around the 110.80 zone.
Part of what happens could depend on data from the US, where the ADP report on employment in the private sector and the ISM manufacturing stand out. Both reports to be released on Wednesday will also serve to shape expectations for the non-farm payroll data for August on Friday.
Technical levels
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