“¢ Resurgent USD demand helps build on overnight goodish rebound.
“¢ Positive US bond yields/risk-on mood provide an additional boost.
“¢ Investors’ focus now shifts to the latest FOMC monetary policy update.
The USD/JPY pair built on overnight goodish rebound from sub-113.00 level and has now moved within striking distance of one-month tops.
Yesterday’s swing low for the major was on the back of a knee-jerk reaction to the US midterm election results, wherein a split Congress was seen dampening prospects for the US President Donald Trump’s fiscal stimulus drive.
However, a late US Dollar rebound from 2-1/2 week lows, which extended through the early European session on Thursday, was seen as one of the key factors pushing the pair higher for the fourth consecutive session.
Bullish traders further took cues from a goodish pickup in the US Treasury bond yields, with the prevalent risk-on mood weighing on the Japanese Yen’s safe-haven status and providing an additional boost to the major.
It would now be interesting to see if the pair is able to build on the positive momentum or once again meets with some fresh supply at higher levels as market participant start positioning for the latest FOMC monetary policy update.
The Fed is widely expected to leave interest rates unchanged and indicate to raise interest rates for the fourth time this year in December, though seems unlikely to be a major game-changer for the pair’s near-term trajectory.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes, “the immediate outlook has been neutralized and a close above 113.80 would revive the bullish view. That said, the pair is more likely to close above 113.80 as technical studies are still biased to the bulls.”
“A daily close below the previous day’s low of 112.95 would signal that a temporary top has been made at 113.82 and could yield a deeper pullback to the ascending 50-day EMA, currently at 112.48,” he added further.
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