|

USD/JPY peeps above 114.00 on Abe win, higher yields

The USD/JPY pair rose to three-month high of 114.10 in Asia as Yen selling gathered pace following Abe's victory in snap elections.

Abe's victory - Icing on the cake for USD bulls

Japanese Prime Minister Shinzo Abe's ruling party scored a big win in Sunday's election. His coalition has retained its two-thirds "super majority" in the lower house. Though LDP win is not a surprise, still, it puts to rest the fears of change in Bank of Japan (BOJ) mandate.  

The outcome of the election is a sort of icing on the cake for USD bulls, given the American dollar was already on the front foot, courtesy of renewed US tax reform hopes and the resulting rise in the treasury yields.

At the time of writing, the pair is trading around 114.00 levels. The 10-year Treasury yield is up one basis point at 2.39%.

Gains capped by geopolitical concerns?

Reports hit the wires in early Asia that US is preparing to put nuclear bombers on 24 hour alert for the first time in 26 years. This clearly represents escalation of tensions between US, North Korea and Russia and could be the reason for the pair's failure to capitalize on the break above 114.00 levels.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "The pair seems poised to extend its advance according to technical readings in the daily chart, although momentum is still scarce. The chart shows that the price settled well above its 100 and 200 DMAs which stand horizontal and within a tight range around 111.20/40, as technical indicators head north, the Momentum within neutral territory, but the RSI currently at 63. Shorter term, and according to the 4 hours chart, the downward potential is well limited as the price develops well above its 100 and 200 SMAs, but further gains are still unclear, as indicators lost bullish strength, holding anyway within positive territory. An upward acceleration through 113.60, however, could lead to a test of the major resistance area around 114.40, where the pair topped in May and July."

 TREND INDEXOB/OS INDEXVOLATILY INDEX
15MOverbought Expanding
1HBullishOverbought Expanding
4HOverbought High
1DBullishOverbought Shrinking
1WBullishOverbought High

            

Author

Omkar Godbole

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

More from Omkar Godbole
Share:

Editor's Picks

EUR/USD flat lines below 1.1900; divergent Fed-ECB expectations offer support

The EUR/USD pair struggles to capitalize on the overnight bounce from the 1.1835-1.1830 region and oscillates in a narrow band during the Asian session on Thursday. Spot prices currently trade around the 1.1875 area, remaining nearly unchanged for the day and staying within striking distance of an over one-week high, reached on Tuesday, amid mixed cues.

GBP/USD slips heading into the Thursday trading window

The Pound Sterling pulled back from four-year highs on Wednesday, weighed down by a combination of Bank of England dovishness and UK political uncertainty, even as the US Dollar weakened on soft labor market revisions. 

Gold posts modest gains above $5,050 as US-Iran tensions persist despite strong labor data

Gold price trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index inflation report will take center stage later on Friday. 

Bitcoin holds steady despite strong US labour market

Bitcoin briefly bounced from $66,000 to above $68,000 but slightly reversed those gains following Wednesday's US January jobs report. The top crypto is hovering around $67,000, down 2% over the past 24 hours as of writing on Wednesday.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

XRP sell-off deepens amid weak retail interest, risk-off sentiment

Ripple (XRP) is edging lower around $1.36 at the time of writing on Wednesday, weighed down by low retail interest and macroeconomic uncertainty, which is accelerating risk-off sentiment.