- USD/JPY continued scaling higher through the mid-European session on Tuesday.
- Encouraging data on coronavirus vaccine trials remained supportive of the uptick.
- Sliding US bond yields, broad-based USD weakness might cap any further gains.
The offered tone surrounding the Japanese yen lifted the USD/JPY pair to fresh one-week tops, around the 107.75 region. Bulls might now be looking to extend the momentum further beyond the key 50-day SMA barrier.
The pair added to the overnight modest positive move and gained some follow-through traction for the second straight session on Tuesday. The uptick was being supported by receding demand for the safe-haven Japanese yen amid signs of progress in the search for a COVID-19 vaccine.
The US drugmaker Moderna said on Monday that clinical results suggested its vaccine has a high probability to protect from the deadly coronavirus disease. This comes on the back of the recent optimism over the easing of lockdown restrictions globally and prompted investors to dump traditional safe-haven currencies.
Despite the Fed Chair Jerome Powell’s upbeat comments about the US economy, the US dollar struggled to attract any meaningful buying interest, instead retreated further from three-week tops set last Friday. This coupled with a modest pullback in the US Treasury bond yields might further contribute towards capping any meaningful positive move for the USD/JPY pair.
Moving ahead, market participants now look forward to the release of the US housing market data – Building Permits and Housing Starts. This will be followed by the Fed Chair Jerome Powell and the US Treasury Secretary Steven Mnuchin’s congressional testimony, which might produce some meaningful trading opportunities during the early North American session.
Technical levels to watch
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