USD/JPY struggles to hold above 105 as US stocks turn green

After spending the first half of the day moving sideways near 104.50 area, the USD/JPY pair gained traction during the American session and advanced t  |  22/09/2020 19:16
  • USD/JPY is rising for the second straight day on Tuesday.
  • US Dollar Index is looking to post its highest daily close since late July.
  • Wall Street's main indexes are posting modest gains.

After spending the first half of the day moving sideways near 104.50 area, the USD/JPY pair gained traction during the American session and advanced to a daily high of 105.07 before going into a consolidation phase. As of writing, the pair was up 0.33% on a daily basis at 104.97.

DXY climbs to multi-week highs on Tuesday

Earlier in the day, the data from the US showed that Existing Home Sales in August rose by 2.4% as expected. Other data revealed that the Richmond Fed Manufacturing Index improved to 21 in September from 18 in August and the Philly Fed Nonmanufacturing Index advanced to 8 from 1.6.

Supported by the upbeat data, the US Dollar Index (DXY) regained traction in the second half of the day and rose to its highest level since late July at 94.08. At the moment, the DXY is up 0.45% on the day at 93.97. Later in the day, FOMC Chairman Jerome Powell refrained from delivering any comments on the policy outlook during his testimony before the House Financial Services Committee. 

Meanwhile, Wall Street's main indexes are gaining between 0.45% and 0.8% on Tuesday to reflect a relatively upbeat market mood, which makes it difficult for the safe-haven JPY to find demand as a safe-haven.

In the early trading hours of the Asian session on Wednesday, the Jibun Bank Manufacturing PMI report for Septmber will be featured in the Japanese economic docket.

Technical levels to watch for

 

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