USD/JPY spikes back to 114.00 handle on notable USD demand
• Jumps back closer to 3-month tops
• Surging US bond yields underpinning
• Diverging monetary policies reinforce bullish outlook
After an initial dip to 113.25 level, the USD/JPY pair regained traction and is now looking to move back above the 114.00 handle.
Resurgent US Dollar demand supportive
In absence of any fresh fundamental development, a fresh leg of upsurge in the US Treasury bond yields underpinned the US Dollar demand and has been one of the key factors driving the pair higher through early NA session.
Adding to this, the prevalent positive trading sentiment around equity markets was also seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's strong up-move back closer to 3-month tops touched yesterday.
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Likely to appreciate further
Meanwhile, the Japanese PM Shinzo Abe's big win in Sunday's snap election now seems to have reaffirmed that BoJ would continue with its ultra-loose monetary policy stance. With the Fed widely expected to raise interest rates in December, diverging monetary policy outlook remains supportive for an additional near-term appreciating move for the major.
On the economic data front, the release of flash US manufacturing and services PMI are due for release during early NA session. The key focus, however, would remain on this week's important macro releases - US durable goods orders on Wednesday, followed by Japanese inflation figures and advance US GDP print on Friday.
Technical levels to watch
On a sustained move beyond the 114.00 handle, the pair is likely to aim towards July monthly highs resistance near mid-114.00s before eventually darting towards the key 115.00 psychological mark.
Meanwhile, on the downside, 113.50-45 area, closely followed by 113.25 level, now becomes immediate support levels to defend, which if broken might trigger a corrective slide to sub-113.00 level (112.80-75 zone).