Search ForexCrunch

   “¢   The prevalent risk-on mod continues to dent JPY’s safe-haven demand.
   “¢   A goodish pickup in the US bond yields remained supportive of the uptick.
   “¢   Upside remains capped amid weaker USD ahead of the US inflation figures.

The USD/JPY pair held on to its mildly positive tone through the early European session on Tuesday, with bulls now eyeing a follow-through momentum beyond the very important 200-day SMA.

The pair built on the previous session’s modest uptick from sub-111.00 level and remained supported by a fresh wave of global risk-on trade. The overnight strong rally in the US equities spilt over to the Asian markets on Tuesday and was seen denting the Japanese Yen’s relative safe-haven demand.

Bullish traders further took cues from a goodish pickup in the US Treasury bond yields, with the benchmark 10-year government bond yield bouncing from 2.62% – the lowest since Jan. 31, touched in the aftermath of mixed US monthly retail sales report released in the previous session.

However, the prevalent  US Dollar selling bias, primarily led by Brexit optimism-led rally in the British Pound, failed to provide any additional boost and might turn out to be the only factor keeping a lid on any runaway rally ahead of today’s important US macro data.

The US economic docket, highlighting the release of the latest consumer inflation figures, which coupled with Wednesday’s durable goods orders data will play an important role in driving the term sentiment surrounding the buck and eventually provide some fresh directional impetus for the major.

Technical levels to watch

Momentum beyond mid-111.00s is likely to confront some fresh supply near the 111.75 level, above which the pair is likely to aim towards conquering the 112.00 round figure mark. On the flip side, the 111.00 handle now becomes immediate support to defend, which if broken might turn the pair vulnerable to accelerate the slide towards 111.70 horizontal support en-route its next major support near the 110.35-30 region.