USD / JPY rises above 104.00 due to renewed USD strength

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  • USD / JPY is moving higher for the second day in a row on Thursday.
  • The yield on 10-year US Treasuries is up almost 2%.
  • The US Dollar DXY Index climbs above 90.50 ahead of Powell’s speech.

After spending most of the European session within a tight range, USD / JPY has gained traction to the upside at the start of the American session, rising near the daily highs around the 104.15 level.. At time of writing, the pair is pulling back slightly from the highs, but it is still positive on the day above the 104.00 level.

The DXY index moves higher at the start of the American session

A renewed USD strength seems to be providing a boost to USD / JPY ahead of key events. A sharp fall observed in the EUR / USD pair, amid the moderate tone seen in the minutes of the December meeting of the European Central Bank (ECB), is allowing the dollar to find demand.

The monthly publication of the ECB revealed that policy makers were concerned about the evolution of the euro exchange rate and the possible negative impact on the inflation outlook. At the moment, the DXY US Dollar Index is up 0.18% on the day at 90.52.

Meanwhile, 10-year US Treasury yield is increasing almost 2% on the day to 1,107%, which helps USD / JPY retain its bullish momentum as investors value the additional government spending, which President-elect Joe Biden is expected to reveal later in the day.

Regarding US economic data, the Labor Department has reported that initial claims for unemployment benefits increased by 181,000 in the week ended January 9 to 965,000, the highest level since mid-August. The data was well above the 789,000 of the market consensus.

More importantly, FOMC Chairman Jerome Powell will speak on the policy outlook at an online event at 17:30 GMT.

USD / JPY technical levels

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