USD/JPY climbs further beyond 113.00 mark, fresh daily high
02.12.2021, 07:29

USD/JPY climbs further beyond 113.00 mark, fresh daily high

  • USD/JPY gained strong positive traction on Thursday amid a turnaround in the risk sentiment.
  • Rising Fed rate hike bets acted as a tailwind for the USD and remained supportive of the move.
  • Worries about Omicron variant could underpin the safe-haven JPY and cap any further gains.

The USD/JPY pair added to its intraday gains and climbed to a fresh daily high, around the 113.25 region during the early European session.

The pair once again managed to find some support ahead of mid-112.00s and attracted fresh buying on Thursday amid a strong recovery in the global risk sentiment. Despite fears about the new Omicron variant of the coronavirus, a generally positive tone around the equity markets undermined the safe-haven Japanese yen. This, in turn, was seen as a key factor that extended some support to the USD/JPY pair.

On the other hand, the US dollar struggled to gain any meaningful traction and did little to provide any additional boost to the major. That said, expectations for a more aggressive policy tightening by the Fed acted as a tailwind for the greenback. This, along with rebounding US Treasury bond yields, impressed bullish traders and remained supportive of the USD/JPY pair's move beyond the 113.00 round figure.

It, however, remains to be seen if bulls are able to capitalize on the move or the USD/JPY pair meets with fresh supply at higher levels. Worries about the economic fallout from the new more transmissible Omicron variant could keep a lid on any optimistic move in the markets and cap gains for the USD/JPY pair. Hence, any futher move up might confront stiff resistance near the overnight swing high, around the 113.60-65 area.

Market participants now look forward to the US economic docket, featuring the release of Challenger Job Cuts and the usual Weekly Initial Jobless Claims data. This, along with speeches by a slew of influential FOMC members, will influence the USD and provide some impetus to the USD/JPY pair. Traders will further take cues from developments surrounding the coronavirus saga to grab some short-term opportunities.

Technical levels to watch

 

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