Search ForexCrunch

   “¢   Surging US bond yields/risk-on mood helped regain positive traction.
   “¢   Upbeat ADP report/ISM PMI provide an additional boost in the last hour.

The USD/JPY pair finally broke out of its European session consolidation phase and is now looking to extend the positive momentum further beyond the 114.00 mark.

After an initial dip to mid-113.00s, the pair regained positive traction and was supported by a goodish pickup in the US Treasury bond yields. Adding to this, a slight improvement in investors’ risk-appetite, as depicted by strong gains in the US equity markets, further weighed on the Japanese Yen’s safe-haven appeal and provided an additional boost.

The latest leg of a sudden spike over the past hour or so could also be attributed to the release of stellar US ISM non-manufacturing PMI, coming in at 61.6 for September. The reading marked the best level since 1997, which coupled with upbeat ADP report on the US private sector employment details remained supportive of the positive momentum.

With today’s key US macroeconomic data out of the way, it would now be interesting to see if bulls are able to maintain their dominant position or the pair continues with its struggle to sustain above the 114.00 handle amid a subdued US Dollar price action.

Technical levels to watch

A follow-through buying has the potential to continue lifting the pair further towards the 114.40 intermediate hurdle en-route the 114.75-80 supply zone and the key 115.00 psychological mark. On the flip side, immediate support is now pegged near the 113.70 region and is closely followed by mid-113.00s, below which the pair is likely to accelerate the slide towards the 113.00 handle.