USD/JPY reclaims 115.00 mark amid stronger USD, US macro data eyed for fresh impetus

• USD/JPY added to the post-FOMC strong gains and continued scaling higher on Thursday.
• The overnight rally in the US bond yields and a sustained USD buying remained supportive.
• Bulls seemed unaffected by the risk-off mood, which tends to benefit the safe-haven JPY.

The USD/JPY pair jumped to a one-and-half-week high during the early part of the European session and was last seen trading around the key 115.00 psychological mark.

The pair added to the previous day's post-FOMC bullish momentum and scaled higher for the second successive day on Thursday, also marking the third day of a positive move in the previous four. The Fed reaffirmed market expectations for an eventual lift-off in March and pushed the US dollar to the highest level since mid-December. This, in turn, was seen as a key factor that provided a strong boost to the USD/JPY pair.

Moreover, the markets have been pricing in a total of four hikes in 2022, which was evident from the overnight rally in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond jumped to 1.85%. Conversely, the 10-year JGB remained near zero due to the Bank of Japan's yield curve control policy. The resultant widening of the US-Japanese yield differential also acted as a tailwind for the USD/JPY pair.

Meanwhile, the prospects for a faster policy tightening by the Fed, along with political tensions between Russia and Ukraine, took its toll on the global risk sentiment. This was evident from a slump in the equity markets. This, however, did little to revive demand for the safe-haven Japanese yen or hinder the USD/JPY pair's strong move up. The price action favours bullish traders and supports prospects for additional gains.

Market participants now look forward to the US economic releases – Advance Q4 GDP, Durable Goods Orders, Weekly Jobless Claims and Pending Home Sales. This, along with the US bond yields, will influence the USD price dynamics and provide a fresh impetus to the USD/JPY pair. Apart from this, traders might take cues from the broader market risk sentiment to grab some short-term opportunities around the major.

Technical levels to watch