USD/JPY climbs to 107.50 area despite broad USD weakness
|- USD/JPY pushes higher toward 107.50 on strong risk appetite.
- US Dollar Index drops below 100 in American session.
- Wall Street's main indexes surge higher on Monday.
The USD/JPY stretched higher in the early trading hours of the American session and touched a fresh daily top of 107.49. Although the pair pulled away slightly in the last hour, it was last seen gaining 0.32% on the day at 107.37.
The risk-on market environment on Monday seems to be weighing on the safe-haven JPY. Boosted by heightened hopes of a global economic recovery and revived optimism about a coronavirus vaccine lift global stock indexes higher. At the moment, Germany's DAX 30 is up more than 5% on the day and wall Street's main indexes are gaining between 2.15% and 3.6%.
On the other hand, the USD is also struggling to find demand as risk-sensitive currencies, such as the EUR and the GBP, are attracting investors. With the US Dollar Index losing more than 0.5% on the day near 99.80, the pair's upside remains capped for the time being.
Focus shifts to FOMC Chairman Powell's testimony
In the early trading hours of the Asian session on Tuesday, Industrial Production and Capacity Utilization data from Japan will be looked upon for fresh impetus. More importantly, FOMC Chairman Jerome Powell will be testifying before the US Senate Banking Committee on Tuesday.
During an interview on Sunday, Powell reiterated that there was no limit to what the Federal Reserve could do with its lending programs. "The Fed is not out of ammunition by a long shot," Powell further explained. "We can expand existing programs or add new ones, add to asset purchases as needed."
Technical levels to watch for
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