USD/JPY rises further above 113.00; yields jump and Wall Street hit record highs

USD/JPY printed fresh weekly highs near the end of the American session above 113.00 while the Dow Jones was headed toward a new record close. Greenback jumped in the market following Trump’s comments about a “phenomenal” tax announcement, yet no details were presented. 

USD/JPY breaks range 

After trading during two days in a range, at the lowest levels since late November, USD/JPY broke to the upside and in a few minutes erased February losses. The pair reached 113.38 and it was trading around 113.30, 150 pips above yesterday’s closing price. 

While the US dollar gained momentum in the market, the yen tumbled weakened by the rally in Wall Street and the increase in US bond yields. The Dow Jones was about to end with a gain of 140 points or 0.70% while the 10-year yield jumped from 2.33% to 2.40%. Gold suffered a strong reversal, completing a renewed Trump trade. 

Technical outlook 

The bearish potential has eased, but not yet reverted warns Valeria Bednarik, Chief Analyst at FXStreet. “In the 4 hours chart, the pair pared gains a few pips below a bearish 20 SMA, whilst technical indicators are turning modestly lower within positive territory, indicating that the upward potential is limited.”

Bednarik added that USD/JPY bounced for the fourth consecutive day from its 100-DMA, around 111.80, and held above the 38.2% retracement of November/December (112.00), “the support area that the pair needs to break to resume its bearish trend”.