The USD/JPY pair gained a follow through traction on Tuesday and extended its recovery move from Friday's low near 112.60 region.
The pair's latest leg of up-move from Monday's 113.00 handle was led by hawkish comments from Philadelphia Federal Reserve Bank President Patrick Harker, which reaffirmed market expectations of faster Fed monetary policy tightening cycle. A fresh wave of up-move in the US Treasury bond yields has been supportive of the market expectations and underpinned the greenback demand on Tuesday.
Adding to this, depressed levels in the Volatility Index (VIX), supporting the ongoing record breaking rally in the US equity markets, is further weighing on the Japanese Yen's safe-haven appeal and collaborated to continuation of the pair's recovery move.
Investors now look forward to today's speeches from various Fed officials and Wednesday's FOMC meeting minutes in order to gauge possibilities and timing of next Fed rate-hike move, which would eventually determine the pair's next leg of directional move.
With the JGB yields flattening out, hawkish monetary policy outlook would lead to a further rise in the US-Japan yield spread and should continue to assist the pair's ongoing up-move back towards retesting 114.25 immediate resistance and eventually towards 115.00 psychological mark.
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