“¢ Builds on overnight strong gains amid a follow-through USD up-move.
“¢ Fading safe-haven demand weighs on JPY and remains supportive.
The USD/JPY pair built its positive momentum beyond the 111.00 handle and touched 1-1/2 month tops in the last hour, albeit retreated few pips thereafter.
The US Dollar extended overnight rebound from overnight three-week lows and was seen as one of the key factors helping the pair to continue gaining positive traction for the second consecutive session on Tuesday.
With investors putting the US-China trade dispute in the back burner, a mildly positive trading sentiment around equity markets dented the Japanese Yen’s safe-haven demand and further collaborated to the pair’s strong up-move through the Asian session.
The Japanese Yen was further weighed down by today’s preliminary release of Machine Tool Orders, coming in to show a growth of 11.4% y/y for June as compared to previous month’s reading of 14.9%.
The pair rose to its highest since May 22, albeit struggled to extend the bullish momentum towards an important resistance near the 111.40 region (May monthly tops). Hence, it would prudent to wait for a strong follow-through buying before positioning for any further near-term up-move.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “A sustained move to 111.55 could be on the cards if the pair closes today above 111.13 (last Tuesday’s bearish outside-day candle).”
“A weekly close above 111.55 (Friday’s NY close) would confirm a long-term bearish-to-bullish trend change and the daily chart indicates the bull breakout will likely happen soon,” he adds further.
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