USD/JPY hits fresh session tops, inching closer to 110.00 mark

Haresh Menghani FXStreet

• A goodish pickup in the US bond yields remains supportive of the strong up-move.
• JPY further weighed down by fading dampen safe-haven demand on positive equities.
• A modest USD retracement does little to provide any additional boost.

The USD/JPY pair continued scaling higher on Wednesday and touched a fresh session high level of 109.81 in the last hour.

The pair built on its Asian session up-move from the 109.00 handle and was further supported by a goodish pickup in the European equity markets, which was seen weighing on the Japanese Yen's safe-haven appeal.

This coupled with a goodish pickup in the US Treasury bond yields, amid rising speculations about steeper Fed monetary policy tightening cycle, remained supportive of the pair's strong up-move through the early European session.

Meanwhile, the US Dollar trimmed some of its early strong gains to fresh YTD tops and did little to attract follow-through buying interest and provide any additional boost, at least for the time being.

It would now be interesting to see if the pair is able to build on the momentum and head towards reclaiming the key 110.00 psychological mark or bulls opt to lighten their bullish bets in light of a highly overbought USD.

Traders now look forward to the US economic docket, highlighting the release of Producer Price index (PPI) for April in order to grab some short-term opportunities later during the early NA session.

Technical levels to watch

The 110.00 handle is likely to act as an immediate resistance and is followed by the very important 200-day SMA barrier near the 110.15-20 region. On the flip side, 109.45 level now seems to protect the immediate downside, which if broken might drag the pair back towards retesting the 109.00 round figure mark.

Author

Haresh Menghani

FXStreet

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

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