USD/JPY extends two-day winning run, hits six-week high
- USD/JPY prints six-week highs on dovish central bank expectations.
- The uptick in Asian equities is likely weighing over the anti-risk JPY.
- USD/JPY is flashing green despite the drop in the US yields.
USD/JPY is better bid for the third straight day and is currently trading at 107.69, the highest level since Aug. 1.
As of now, the US 10-year yield is reporting a three basis point drop to 1.71%, having rallied by 8 basis points and 9 basis points on Monday and Tuesday, respectively.
The pair's uptick, therefore, could be associated with the dovish Bank of Japan (BOJ) expectations. With the pickup in global growth taking longer than expected, the BOJ may feel pressured to cut rates further into the negative territory next week, sources familiar with the matter have told Reuters.
Also, Asian stocks except the Shanghai Composite index are reporting gains and seem to be adding to the bearish pressures around the anti-risk JPY.
Eyes trendline resistance
The pair could challenge the resistance of the trendline connecting April 24 and Aug. 1 highs, currently at 108.07, courtesy of the dovish BOJ expectations and if equities remain bid.
The Japanese Yen may find bids if the European Central Bank (ECB) sounds less dovish-than-expected on Thursday, sending the equities lower. In that case, the test of the trendline resistance may remain elusive
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
