USD/JPY looks to 106.70 amid risk-on, ahead of Fed minutes
|- USD/JPY extends gains as risk-on remains at full steam.
- Easing Fed rate cut expectations lifts Treasury yields across the curve.
- All eyes on US data and FOMC minutes for fresh direction.
The selling interest around the anti-risk Yen remains unabated so far this Wednesday, keeping the USD/JPY pair in highs around the 106.55 region, as the bulls await the Federal; Reserve’s (Fed) July meeting’s minutes for the next push higher.
FOMC minutes to arrive less dovish?
The risk-on sentiment remains the underlying theme heading into the Fed event, as Treasury yields continue to push northwards alongside the US equity futures.
The rally in the US rates can be attributed to markets’ expectations that the Fed minutes will be read less dovish, as a strong and healthy US economy could see Fed adopting a slower pace of rate cuts than previously expected.
However, the further upside lacks momentum, as the greenback has softened its position against the six major currencies amid reduced demand for the safe-haven USD. The USD index is seen moving away from three-week peaks to now trade flat near 98.20 region.
Further, strong option expiries aligned near 106.70/75 continue to guard the upside, below which the pair remains trapped for the fourth straight session today. The immediate focus now remains on the US Existing Homes Sales data, as the US-China trade fears take a backseat ahead of the Fed minutes due later today.
USD/JPY Technical levels to consider
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