USD/JPY steadily climbs to multi-day peak, further beyond mid-134.00s

USD/JPY gains strong positive traction on Tuesday and is supported by a combination of factors.
Hawkish Fed expectations, rising US bond yields continue to underpin the USD and act as a tailwind.
The Fed-BoJ policy divergence weighs on the JPY, though recession fears could limit deeper losses.
Investors might also prefer to wait for the release of the key FOMC meeting minutes on Wednesday.

Haresh Menghani FXStreet

The USD/JPY pair builds on its intraday positive move and climbs to the 134.65-134.70 area, or a four-day high during the early North American session.

The US dollar is prolonging its recovery from over a one-month low touched in the aftermath of the softer US CPI report and gaining traction for the third successive day on Tuesday. The momentum pushes the buck to a fresh monthly peak and acts as a tailwind for the USD/JPY pair.

The recent hawkish remarks by several Fed officials suggest that the US central bank would stick to its policy tightening path. This, along with a pickup in the US Treasury bond yields, continues to underpin the USD and remain supportive of the USD/JPY pair's strong move up.

Apart from this, a big divergence in the Fed-Bank of Japan (BoJ) monetary policy stance is driving flows away from the Japanese yen and providing an additional lift to spot prices. It is worth recalling that the BoJ has repeatedly said that it would retain its ultra-easy policy settings.

That said, the prevalent cautious market mood - amid growing worries about a global economic downturn - extends some support to the safe-haven JPY. This might turn out to be the only factor that might hold back bulls from placing fresh bets and cap any further gains for the USD/JPY pair.

Traders might also prefer to move on the sidelines ahead of the FOMC minutes, scheduled for release on Wednesday. Investors would look for clues about the possibility of a 75 bps rate hike in September, which would influence the USD and provide a fresh directional impetus to the USD/JPY pair.

Technical levels to watch

USD/JPY

Overview
Today last price	134.48
Today Daily Change	1.16
Today Daily Change %	0.87
Today daily open	133.32

Trends
Daily SMA20	134.84
Daily SMA50	135.35
Daily SMA100	131.45
Daily SMA200	123.36

Levels
Previous Daily High	133.6
Previous Daily Low	132.56
Previous Weekly High	135.58
Previous Weekly Low	131.73
Previous Monthly High	139.39
Previous Monthly Low	132.5
Daily Fibonacci 38.2%	132.95
Daily Fibonacci 61.8%	133.2
Daily Pivot Point S1	132.71
Daily Pivot Point S2	132.11
Daily Pivot Point S3	131.67
Daily Pivot Point R1	133.76
Daily Pivot Point R2	134.2
Daily Pivot Point R3	134.8

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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