USD/JPY sits near YTD tops, above mid-111.00s ahead of Powell/US data
|- USD/JPY gained strong follow-through traction on Tuesday and retested YTD tops.
- Surging US bond yields acted as a tailwind for the USD and remained supportive.
- The risk-off impulse failed to benefit the safe-haven JPY or hinder the momentum.
The USD/JPY pair continued scaling higher through the early North American session and tested YTD tops, around the 111.65 region in the last hour.
The pair prolonged its recent bullish trajectory and gained strong follow-through traction for the fifth successive session on Tuesday. The widening of the nominal yield differential between the US and Japanese government bonds continued driving flows away from the Japanese yen.
The US Treasury bond yields have been rallying since the end of last week after the Fed hinted that it would begin tapering its bond purchases as soon as November. Adding to this, the dot plot indicated that policymakers were inclined to raise interest rates in 2022.
Conversely, the 10-year Japanese government bond yields remained near zero due to the Bank of Japan's yield curve control policy. This, along with a broad-based US dollar strength, provided an additional boost to the USD/JPY pair and contributed to the positive momentum.
Bulls seemed rather unaffected by the risk-off impulse, which tends to benefit the safe-haven JPY. The global risk sentiment took a hit amid a selloff in the money markets, worries about the debt crisis at China Evergrandeand Group the intensifying energy crisis in Europe and China.
Next on tap will be Fed Chair Jerome Powell's testimony before the Senate Banking Committee and the release of the Conference Board's Consumer Confidence Index. Apart from this, the US bond yields and the broader market risk sentiment would provide some impetus to the USD/JPY pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.