USD/JPY climbs above 110.50 as US stocks rally in early trade

• Wall Street opens the day sharply higher.
• Upbeat housing data supports greenback.
• 10-year US T-bond yield erases large part of daily gains.

The USD/JPY pair gained traction in the early NA session and rose to a daily high of 110.70 before going into a consolidation phase in the last hour. As of writing, the pair was trading at 110.60, adding 0.6% on a daily basis.

Earlier today, the strong rebound seen in the US Treasury bond yields helped the pair push higher above the 110 mark. Although the 10-year reference erased a large part of its gains in the last couple of hours, the fact that major equity indexes in the U.S. started the day with strong gains today provided an additional boost to the risk-sensitive USD/JPY pair. At the moment, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite are all adding around 1% on the day.

Meanwhile, the US Dollar Index, which spent the majority of the day moving sideways near 96.50, reacted positively to today’s housing market data and rose to a session top of 96.73. The FHFA today reported that house prices rose 0.6% in January and the U.S. Census Bureau announced that housing starts declined by only 8.7% to better the market expectation for a fall of 28.3%. On a negative note, the Conference Board’s Consumer Confidence Index edged down to   124.1 in March from 131.4 in February to cap the DXY’s gains.

Technical levels to consider

The immediate resistance for the pair could be seen at 110.65/70 (50-DMA/daily high) ahead of 111.10 (20-DMA) and 111.50 (200-DMA). On the downside, supports align at 110 (psychological level/daily low), 109.70 (Mar. 25 low) and 109.40 (Jan. 27 low).