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USD/JPY clings to gains near session tops, around 109.75-80 region

  • USD/JPY caught some fresh bids on Thursday amid a goodish pickup in the USD demand.
  • Rebounding US bond yields provided a modest lift to the USD and remained supportive.
  • A softer risk tone might underpin the safe-haven JPY and keep a lid on any further gains.

The USD/JPY pair edged higher through the early European session and climbed to fresh daily tops, around the 109.80 level in the last hour.

Following the previous day's pullback of around 35 pips from the vicinity of weekly tops, the pair regained positive traction on Thursday and was supported by a combination of factors. Concerns that the recent rise in COVID-19 cases could hinder Japan's fragile economic recovery acted as a headwind for the Japanese. In the latest development, Japan extended a state of emergency in Tokyo and eight other prefectures by about 3 weeks to June 20.

On the other hand, the US dollar found some support from a goodish pickup in the US Treasury bond yields. This was seen as another factor that contributed to the bid tone surrounding the USD/JPY pair. Investors have grown nervous about whether a surprisingly stronger US economic data could force the Fed to raise interest rates sooner rather than later. This, in turn, prompted some unwinding of the USD bearish bets ahead of Friday's release of the NFP report.

This could set the tone at the upcoming FOMC meeting later this month, which will play a key role in influencing the USD price dynamics and provide a fresh directional impetus. In the meantime, Thursday's US macro data would be looked upon for some short-term trading opportunities. The US economic docket features the release of the ADP report on private-sector employment, the usual Initial Weekly Jobless Claims and ISM Services PMI.

Meanwhile, a softer tone surrounding the equity markets might extend some support to the safe-haven JPY. This, in turn, might turn out to be the only factor capping gains for the USD/JPY pair, at least for the time being. Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the key 110.00 psychological mark, before positioning for any further appreciating move.

Technical levels to watch

USD/JPY

Overview
Today last price109.74
Today Daily Change0.18
Today Daily Change %0.16
Today daily open109.56
 
Trends
Daily SMA20109.18
Daily SMA50109.2
Daily SMA100107.65
Daily SMA200106.16
 
Levels
Previous Daily High109.88
Previous Daily Low109.4
Previous Weekly High110.2
Previous Weekly Low108.56
Previous Monthly High110.2
Previous Monthly Low108.34
Daily Fibonacci 38.2%109.7
Daily Fibonacci 61.8%109.58
Daily Pivot Point S1109.34
Daily Pivot Point S2109.13
Daily Pivot Point S3108.86
Daily Pivot Point R1109.83
Daily Pivot Point R2110.1
Daily Pivot Point R3110.31

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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