USD/JPY climbs to near four-week tops, closer to mid-110.00s
- USD/JPY gained strong follow-through traction for the third consecutive session on Wednesday.
- The recent strong surge in the US bond yields underpinned the USD and remained supportive.
- Bulls seemed rather unaffected by a softer risk tone, which tends to benefit the safe-haven JPY.
The USD/JPY pair continued scaling higher heading into the European session and shot to near one-month tops, closer to mid-110.00s in the last hour.
The pair built on this week's goodish rebound from the 109.60-55 support zone and gained traction for the third consecutive session on Wednesday. The recent strong upsurge in the US Treasury bond yields continued acting as a tailwind for the US dollar. This, in turn, was seen as a key factor driving the USD/JPY pair higher through the first half of the trading action.
In fact, the yield on the benchmark 10-year US government bond jumped to the highest level since mid-July, around 1.385% on Tuesday amid expectations for an imminent Fed taper announcement. Despite disappointing headline NFP print, investors seem convinced that the US central bank could still begin rolling back its massive pandemic-era stimulus in November.
The supporting factor, to a larger extent, offset the prevalent cautious mood, which tends to benefit the safe-haven Japanese yen. Worries about the recent rise in COVID-19 cases and the fast-spreading Delta variant dampened investors' appetite for perceived riskier assets. This was evident from a generally softer tone around the global equity markets.
Apart from this, technical buying on a sustained move back above the key 110.00 psychological mark further contributed to the ongoing positive momentum. A subsequent strength beyond the 110.40-50 area will now be seen as a fresh trigger for bulls and set the stage for a further near-term appreciating move amid absent market-moving economic releases.
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