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  • US dollar gains momentum during the American session.
  • Dow Jones at record highs, US yields sharply higher.

The USD/JPY is rising more than 50 pips, having the best day in month boosted by higher US yields and risk appetite. The pair bounced from the lowest levels since March near 102.50 and peaked at 103.43, a one-week high.

As of writing, the pair trades at 103.25 ahead of the release of the FOMC minutes. The key driver on Wednesday, following the elections that will decide the US Senate’s composition, are US yields. The 10-year yield reached 1.05%, the highest since March.

Equity prices in Wall Street turned decisively to the upside. The Dow Jones is at record highs, up by 1.55% and the Nasdaq gains 0.51%. Weaker-than-expected US economic data did not affect market sentiment. The ADP report showed the first negative variation in private employment since April. Now market participants await the FOMC minutes from its latest meeting.

From a technical perspective, the main trend in USD/JPY points to the downside, but the sharp rebound alleviated the bearish pressure in the short-term. A consolidation above 103.30 would keep the pair supported. A daily close above the 20-day moving average at 103.55 would weaken the bearish perspective. The key level to watch is seen around 104.40, a downtrend line that should change the bias to neutral if broken.

Technical levels