- USD/JPY caught some aggressive bids and broke out of its recent trading range.
- The prevailing risk-on mood, stronger USD remained supportive of the move.
- Investors now look forward to the release of the latest FOMC meeting minutes.
The USD/JPY pair continued scaling higher through the early North-American session and surged to over nine-month tops, around the 110.80 region in the last hour.
The pair caught some aggressive bids on Wednesday and finally broke out of its two-week-old trading range amid a turnaround in the global risk sentiment, which weighed heavily on the Japanese yen’s perceived safe-haven status.
Bulls remain in full control
Despite mounting concerns over deepening economic fallout from the coronavirus outbreak, the fact that the number of newly infected cases have been declining steadily provided a goodish lift to investors’ appetite for riskier assets.
The same was evident from a positive move around equity markets, which coupled with the prevailing bullish sentiment surrounding the US dollar provided an additional boost and further contributed to the pair’s ongoing momentum.
The greenback stood tall near multi-month tops and was further underpinned by a modest pickup in the US Treasury bond yields, supported by stronger-than-expected US housing market data and Producer Price Index for January.
Adding to this, possibilities of some short-term trading stops being triggered on a sustained move beyond the previous YTD tops further seemed to have contributed to the pair’s latest leg of an upsurge over the past hour or so.
It will now be interesting to see if the pair is able to build on the momentum or witnesses some long-unwinding trade at higher levels amid extremely overbought conditions on hourly charts and ahead of the latest FOMC meeting minutes.
Technical levels to watch
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