USD/JPY surges to two-week high ahead of US data

The Japanese Yen remained on the back-foot through mid-European session on Wednesday, with the USD/JPY pair surging to nearly two-week highs and inching closer to the 114.00 handle. 

Spot extended previous session's sharp rebound from 100-day SMA support and cleared the 113.75 immediate horizontal resistance amid follow through greenback traction in wake of growing consensus over an imminent Fed rate-hike move at the next FOMC meeting on March 14-15.

The latest leg of up-move in the US treasury bond yields reinforces market expectations and pushed the greenback higher across the board, with the key US Dollar Index testing daily peaks near 101.75 region, and has been supportive of the pair's up-move to the highest level since Feb. 16.

March FOMC rate hike looking more likely now – MUFG

Moreover, a fresh wave of global risk-on, as depicted by strong up-move in the European equity markets, is further driving flows away from traditional safe-haven assets and collaborating to the pair's strong recovery move from nearly two-week lows touched yesterday. 

The US Dollar price dynamics would continue to be a key determinant of the pair's movement on Wednesday and hence, the US economic data would now be looked upon for fresh impetus during early NA session.

Technical levels to watch

From current levels, a follow through momentum above 114.00 handle is likely to get extended towards 114.25-30 horizontal resistance, above which the pair seems all set to head back towards testing 50-day SMA hurdle near 114.45-50 region ahead of 114.96 (Feb. 15 high).

On the downside, 113.50 level now becomes immediate support to defend, which if broken is likely to accelerate the slide towards 113.00 round figure mark, en-route 112.85-80 strong horizontal support.