USD/JPY jumps to one-week highs as US yields soar on trade headlines
- Wall Street hits record highs after US President Trump suggests imminent deal with China.
- Higher US yields and risk appetite weaken the Japanese yen.
The USD/JPY pair jumped from 108.60 to 109.30, reaching the highest level in over a week following the latest trade headlines that triggered a rally in Wall Street.
Fresh expectations of a deal between the US and China on tariffs before the December 15 deadline boosted equity markets. The Dow Jones hit new record highs and now is up 0.35%, off highs as the optimism eased.
US bonds tumbled, pushing the yen lower across the board. The US 10-year yield rose more than 5% from 1.80% to near 1.90% in a few minutes. Other save haven assets like gold, also dropped significantly.
More headlines related to trade will likely continue to flow, making an impact on market sentiment. Another critical event taking place is the general election in the United Kingdom. Results will be out during Friday’s Asian session.
USD/JPY breaks seven-day range
The rally of the USD/JPY was also favored by technical factors. The pair rose above the 109.00 area, breaking a seven-day trading range. It also rose back above the 20-day moving average that stands at 108.80, level that could be seen now as the immediate support. The next support is the lower limit of the mentioned range around 108.40.
As of writing, USD/JPY trades at 109.10, up almost 60 pips, having the best performance in a month. A daily close around current levels could signal more gains ahead.