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  • USD/JPY is gaining more than 2% on Monday.
  • 10-year US Treasury bond yield soared to fresh multi-month highs.
  • US Dollar Index closes in on 93.00 after sharp U-turn.

The USD/JPY pair extended its rally in the American trading hours on Monday and touched its highest level since October 20th at 105.59. As of writing, the pair was up 2.15% on the day at 105.55.

JPY struggles to find demand as a safe-haven

The broad-based USD strength and the risk-on market mood provide a strong boost to USD/JPY at the start of the week.

Earlier in the day, Pfizer reported that its coronavirus vaccine showed a more-than-90% effectiveness in the phase-three trial. This development triggered a risk rally in financial markets and Wall Street’s main indexes opened at fresh all-time highs. At the moment, the S&P 500 and the Dow Jones Industrial Average indexes gain 2.7% and 3.8%, respectively.

Covid Vaccine: Pfizer’s success promising for three other efforts, rally may have only just begun.

Additionally, the US Treasury bond yields soared higher and helped the greenback outperform its rivals. The US Dollar Index, which lost 1.75% last week, is currently up 0.7% on the day at 92.86 and the 10-year US T-bond yield is at its highest level since March at 0.953%, up 16.6%. 

Trade Balance will be released from Japan in the early trading hours of the Asian session but the risk sentiment is likely to remain the primary driver of the markets. 

Technical levels to watch for