USD/JPY steadily climbs back to 109.35 region amid a modest USD strength

A goodish pickup in the USD demand assisted USD/JPY to regain positive traction on Tuesday.
Dovish Fed expectations might hold the USD bulls from placing aggressive bets and cap gains.

Haresh Menghani FXStreet

The USD/JPY pair edged higher through the first half of the trading action on Tuesday and climbed to fresh daily tops, around the 109.30-35 region heading into the European session.

Following the previous day's pullback of around 80 pips from three-week tops, the pair managed to regain positive traction and was supported by a goodish pickup in the US dollar demand. Speculations that positive US economic data may force the Fed to raise interest rates sooner rather than later and forced investors to lighten their bearish USD bets.

The momentum was further sponsored by an extended selloff in the Japanese yen amid worries that the recent surge in COVID-19 cases could hinder Japan's fragile economic recovery. Apart from this, the BoJ's forecast that inflation will not reach the 2% target through early 2023 further acted as a headwind for the safe-haven JPY and remained supportive.

That said, a combination of factors might hold bulls from placing aggressive bets. A generally softer tone around the US equity futures could extend some support to the safe-haven Japanese yen. This, along with the Fed's stubbornly dovish outlook might further contribute towards keeping a lid on any runaway rally for the USD/JPY pair, at least for now.

Tuesday's US economic docket features the second-tier releases of Trade Balance figures and Factory Orders data. Investors might also prefer to wait on the sidelines ahead of Friday's release of the US monthly jobs report (NFP), making it prudent to wait for some follow-through buying before positioning for any further appreciating move.

Technical levels to watch

USD/JPY

Overview
Today last price	109.35
Today Daily Change	0.28
Today Daily Change %	0.26
Today daily open	109.07

Trends
Daily SMA20	108.82
Daily SMA50	108.65
Daily SMA100	106.39
Daily SMA200	105.8

Levels
Previous Daily High	109.7
Previous Daily Low	108.9
Previous Weekly High	109.37
Previous Weekly Low	107.64
Previous Monthly High	110.85
Previous Monthly Low	107.48
Daily Fibonacci 38.2%	109.2
Daily Fibonacci 61.8%	109.39
Daily Pivot Point S1	108.74
Daily Pivot Point S2	108.42
Daily Pivot Point S3	107.94
Daily Pivot Point R1	109.54
Daily Pivot Point R2	110.02
Daily Pivot Point R3	110.35

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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