USD/JPY rallies further beyond 115.00 mark, over two-week high ahead of US data

The USD/JPY pair continued scaling higher heading into the North American session and shot to over a two-week high, around the 115.25 region in the last hour.

The post-FOMC strong US dollar buying interest remained unabated on Thursday, which, in turn, pushed the USD/JPY pair higher for the second successive day on Thursday. In fact, the key USD Index jumped to the highest level since July 2020 and remained well supported by the prospects for a faster policy tightening by the Fed.

It is worth recalling that the Fed on Wednesday indicated that it would likely begin hiking interest rates in March. In the post-meeting press conference, Fed Chair Jerome Powell kept the door open for a 50 basis-points rate hike move in March. This was seen as a key factor that continued acting as a tailwind for the greenback.

Apart from this, the widening of the US-Japanese government bond yield differential, along with a goodish rebound in the equity markets drove flows away from the safe-haven Japanese yen. This further contributed to the strong intraday move up for the USD/JPY pair, taking along some trading stops placed near the 115.00 mark.

Hence, the ongoing positive momentum could further be attributed to some technical buying, though overbought RSI (14) on hourly charts warrants caution for bullish traders. Market participants now look forward to the US macro releases – Advance US Q4 GDP and Durable Goods Orders – for a fresh trading impetus.

The US economic docket also features the release of the Weekly Initial Jobless Claims and Pending Home Sales data, which along with the US bond yields, will influence the USD price dynamics. Apart from this, traders will take cues from the broader market risk sentiment for some short-term opportunities around the USD/JPY pair.

Technical levels to watch