USD/JPY spikes to fresh weekly tops, 111.00 mark back on sight amid improving risk sentiment
| • A goodish bounce in the US bond yields helped the USD to regain positive traction.
• Improving risk sentiment weighed on JPY’s safe-haven status and remains supportive.
• Bulls seemed rather unaffected by the latest disappointment from the US Q4 GDP print.
The USD/JPY pair built on its steady intraday climb and jumped to fresh weekly tops, around the 110.75-80 region during the early North-American session.
A combination of supporting factors - including a goodish pickup in the US Dollar demand and initial signs of stability in equity markets, assisted the pair to stage a goodish bounce from the key 110.00 psychological mark.
Recovering in the US Treasury bond yields, to some extent, eased fears of an impending recession in the world's largest economy and helped the greenback to regain positive traction since the early European session.
This coupled with a slight improvement in investors' appetite for riskier assets further dented the Japanese Yen's relative safe-haven status and further collaborated to the pair's strong intraday up-move of over 80-pips.
A turnaround in the sentiment seemed rather unaffected by today's weaker than expected final Q4 GDP print, showing that the economic growth decelerated to 2.2% annualized pace during the last quarter of 2018.
Meanwhile, possibilities of some short-term trading stops being triggered on a sustained move beyond the Asian session swing highs, around mid-110.00s, also seems to have contributed to the latest spike in the last hour.
Hence, it would be prudent to wait for a strong follow-through strength to see if the sudden pickup in solely led by stop-run or is backed by any genuine buying, which should set the stage for a further near-term positive move.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst explains: “In the 4 hours chart, the pair is now battling with the 20 SMA, and far below the larger ones, with the 100 SMA about to cross the 200 SMA. Technical indicators hover directionless around their midlines, lacking directional strength. The technical stance is therefore neutral, although the risk remains skewed to the downside amid dismal market sentiment.”
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