- Nikkei 225 index extends recovery.
- USD moves higher with USTs
- US data, tax reform vote hold the key.
The USD/JPY pair regains poise and trades firmer above 113 handle, having found fresh buyers near 112.85 region, although further upside remains conditional on the outcome of the US tax vote scheduled later today.
USD/JPY: Risk-on at full steam
With risk-on moods pick-up pace, the safe-haven Yen continues to get battered against its American counterpart, as the spot tracks the renewed upside seen in Treasury yields and a solid rebound staged by the Japanese stocks. The Nikkei 225 index rallies +1.60% to 22,380 points, while the 10-year Treasury yields gains +0.50% to 2.347%, sending the USD index to 94.85 levels.
More so, increased odds of a Dec Fed rate hike amid upbeat US core CPI data also adds to the fresh signs of life seen in the greenback, as we head towards the key US House Republicans vote on tax reforms.
Meanwhile, reporters from the White House said earlier today that the GOP leaders are confident they have the numbers to pass the tax bill today. Ahead of the vote, President Donald Trump plans to go to Capitol Hill on Thursday to make the case for tax cuts.
In the meantime, the US jobless claims, industrial output, and Philly Fed manufacturing index will keep the traders busy,
USD/JPY Technical View
Omkar Godbole, Analyst at FXStreet explains: “The spot looks set to test 112.00 levels and may drop to 111.56 (head and shoulders target). The upside is likely to be capped around 113.50, given the 5-day MA and 10-day MA has adopted a bearish bias. Bullish breakout scenario - A break above 114.00 (descending trendline resistance) would add credence to the upward sloping 5-week MA and 10-week MA and shall open doors for 115.00-115.50 levels.”
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