“¢ Fading safe-haven demand helps the pair to regain positive traction.
“¢ A mildly positive tone around the USD remains supportive of the uptick.
“¢ Investors’ focus now shifts to the upcoming US midterm elections.
The USD/JPY pair regained positive traction on Tuesday and climbed to four-week tops, around the 113.40-45 region in the last hour.
After yesterday’s directionless price-action, the pair caught some fresh bids and cautiously built on its post-NFP positive momentum to move beyond the 113.35 immediate hurdle.
A mildly positive tone around equity markets, which tends to weigh on the Japanese Yen’s safe-haven status, was eventually seen as one of the key factors driving the pair higher.
Meanwhile, the US Dollar remained stuck in a tight range ahead of the US midterm elections and did little to provide any meaningful impetus, though remained supportive of the up-move.
Markets are increasingly pricing in the possibility of a divided Congress, which might make difficult for the US President Donald Trump to pursue more aggressive policies and eventually turn out to be a bearish catalyst for the greenback.
However, a Republican victory in both chambers is likely to reignite the USD rally and assist the pair to continue with its upward trajectory ahead of the latest FOMC monetary policy update on Thursday.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 113.65 level, above which the pair seems all set to aim towards reclaiming the 114.00 round figure mark.
On the flip side, the 113.20 level, closely followed by the 113.00 handle now seems to protect the immediate downside, which if broken might prompt some fresh weakness back towards the 112.60-50 support area.
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