USD/JPY jumps back closer to 6-month tops

   “¢   Powell’s hawkish comments lift the already stronger USD.
   “¢   A goodish pickup in US bond yields remains supportive.

The USD/JPY pair continued gaining positive traction through the early North-American session and spiked back to six-month tops, around the 112.75-80 region.

Traders seemed to have largely negated today’s mixed US economic data, with resurgent US Dollar demand turning out to be an exclusive driver of the pair’s latest leg of upsurge since the early European session.  

The ongoing USD up-move got an additional boost from the Fed Chair Jerome Powell’s hawkish comments, saying that the best policy is to keep raising interest rates gradually. The same was evident from a sudden pickup in the US Treasury bond yields and remained supportive of the pair’s up-move.

Meanwhile, a goodish recovery in the US equity markets was seen weighing on the Japanese Yen’s safe-haven appeal and further collaborated to the positive momentum, lifting the pair back towards six-month tops touched last Friday.

It would now be interesting to see if the pair is able to build on the momentum or once again fails to make it through the 113.00 handle, suggesting that the near-term bullish trajectory might have started losing steam.  

Technical levels to watch

On a sustained move beyond the 113.00 handle, coinciding with 161.8% Fibo. expansion level of the 109.37-111.14 up-move and subsequent retracement, the pair is likely to aim towards testing YTD high level of 113.39.

On the flip side, the 112.30-20 region might continue to protect the immediate downside, which if broken might prompt some long-unwinding and drag the pair below the 112.00 handle towards a previous resistance, now turned support, near the 111.40 area.