USD/JPY reclaims 115.00 mark amid stronger USD, US macro data eyed for fresh impetus

The USD/JPY pair jumped to a one-and-half-week high during the early part of the European session and was last seen trading around the key 115.00 psychological mark.

The pair added to the previous day's post-FOMC bullish momentum and scaled higher for the second successive day on Thursday, also marking the third day of a positive move in the previous four. The Fed reaffirmed market expectations for an eventual liftoff in March and pushed the US dollar to the highest level since mid-December. This, in turn, was seen as a key factor that provided a strong boost to the USD/JPY pair.

Markets have been pricing in a total of four hikes in 2022, which was evident from the overnight rally in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond jumped to 1.85%. Conversely, the 10-year JGB remained near zero due to the Bank of Japan's yield curve control policy. The resultant widening of the US-Japanese yield differential also acted as a tailwind for the USD/JPY pair.

The prospect of faster policy tightening by the Fed, along with political tensions between Russia and Ukraine, have taken their toll on global risk sentiment. This is evident from the slump in equity markets. This has done little to revive demand for the safe-haven Japanese yen, however, or hinder the USD/JPY pair's strong move up. The price action favours bullish traders and supports prospects for additional gains.

Market participants are now looking forward to US economic releases – Advance Q4 GDP, Durable Goods Orders, Weekly Jobless Claims and Pending Home Sales. These, along with US bond yields, will influence the USD price dynamics and provide a fresh impetus to the USD/JPY pair. Apart from this, traders might take cues from the broader market risk sentiment to grab some short-term opportunities around the major.

Technical levels to watch