USD/JPY sits near 2-week tops, around 113.00 handle
• Consolidates US tax-bill optimism-led strong gains.
• Sustained move beyond 113.00 needed for additional gains.
• US factory orders data eyed for trading impetus.
The USD/JPY pair extended its consolidative price action through the early NA session and remained confined within a narrow trading range just below the 113.00 handle.
News that the US Senate passed a tax-code overhaul provided some early support for the US Dollar at the start of a new trading week. The long-awaited tax reforms seemed to have bolstered hopes for an aggressive Fed monetary policy tightening cycle in 2018. The same was evident from surging US Treasury bond yields and continued underpinning the greenback demand.
Adding to this, the prevalent risk-on environment, as depicted by strong gains around equity markets, was further seen weighing on the Japanese Yen's safe-haven appeal and remained supportive of the pair's strong bid tone.
Meanwhile, concerns over an investigation into alleged Russian interference in the US 2016 presidential election now seemed to cap gains, with the pair's bullish momentum struggling to gain any strong follow-through traction beyond the 113.00 handle.
• US: Stronger impetus to come from political developments - BBH
Moving ahead, today's release of factory orders data from the US is unlikely to act as a game changer but would still be looked upon for some short-term trading impetus.
Valeria Bednarik, American Chief Analyst at FXStreet writes, "the pair has lost upward momentum in intraday charts, as its holding near its daily highs. In the 4 hours chart, the price is being capped by a horizontal 200 SMA, well above the 100 SMA, and with technical indicators holding flat well above their mid-lines, lacking directional strength. The pair has several daily highs and lows in the 113.10 region, the level to break to confirm additional advances during the upcoming sessions. Below the mentioned 112.65 level, on the other hand, the risk will turn toward the downside, with scope then to fall down to 112.10."