Despite minor USD gains and a factors which contribute tone, USD/JPY reclaims the 129.00 level and even over.

• On Friday, the USD/JPY strengthens but also receives support from a number of variables.
• An even further increase in US bond yields serves as a headwind that boosts Greenback desire.
• Appropriate risk aversion weakens the safe-haven JPY and provides the duo a further impetus.

On the final day of the week, the USD/JPY pair draws some investors and gradually moves again over the 129.00 mark during in the Asian session. Spot prices, in contrast hand, are still locked in the same zone they’ve remained in since the beginning of the week, so optimistic investors should exhibit care while setting up for any additional session gains.

The US Dollar gets modest assistance from rising US Treasury bond rates, which ultimately serves as just a headwind for the USD/JPY pair. In fact, despite confusion regarding the Fed’s rate-hike plan, the yields on the typical 10-year US government bond climbed from Thursday’s weakest point since mid-Sept.

In actuality, the marketplace has been reflecting a higher probability of a smaller 25 basis point Fed rise in interest rates in Feb. However, the positive US macro figures published on Thursday as well as the recent aggressive views expressed by a number of Fed members suggest that cost of borrowing are likely to remain higher for a longer amount of time, which benefits those who are bullish on the USD.

In addition, the sheltered Japanese Yen is depressed and indeed the USD/JPY cross is supported by an overall optimistic climate in the equities markets. Following the People’s Bank of China (PBoC) announcement on Friday to maintain its baseline loan prime rate at record lows for a 5th straight month, markets are now more hopeful about a rebound in the 2nd-largest economy in the world.

However, recent concern about strong inflation could lead the Bank of Japan (BoJ) to adopt a more aggressive posture late this year has limited the appreciation for the USD/JPY cross, at least momentarily. Remember that the BoJ opted to maintain its current monetary policy parameters early in the week, defying expectations for more aggressive indications.

However, despite the absence of a substantial carry purchasing, the macroeconomic context supports possibilities for some significant upside for the USD/JPY cross. The Greenback and the USD/JPY duo will be influenced by the US Existing Homes Sales numbers and comments by important FOMC policymakers, according to market players.

Technical Key levels to Monitor