USD/JPY extends its three-day gains, steady at around 114.30s

• The US dollar advances 0.59% in the week vs. the Japanese yen.
• Higher US T-bond yields rise three basis points close to 1.50%.
• USD/JPY Price Forecast: It has an upward bias, though accelerating the trend would need a break above 114.70.

The US dollar extends its rally against the Japanese yen, advances for the third consecutive day, trading at 114.36 during the New York session at press time. Positive news on the Covid-19 Omicron-variant front is cheered by investors as the Santa Rally finally kicked in. European equity indices rise between 0.93% and 1.42%, while US stock indices advance between 0.62% and 0.70%.

The US Food and Drug Administration (FDA) has authorized Covid-19 treatments in the last two days. On Wednesday, approved Pfizer’s Plaxovid, treatment for high-risk patients. By Thursday, Molnupravir, a treatment pill developed by Merck, received the green light from the FDA.  Both treatments would help to curb rising infections from overwhelming hospitals.

That said, US T-bond yields rallied on the news, with the 10-year US Treasury yield rising three basis points, closing to 1.50%, underpins the USD/JPY. In the meantime, the US Dollar Index, which tracks the buck’s performance against a basket of six rivals, is barely up 0.03%, up to 96.10.

USD/JPY Price Forecast: Technical outlook

The USD/JPY daily chart depicts the pair has an upward bias, supported by the daily moving averages (DMAs) residing below the spot price. Additionally, an upslope trendline drawn from September swing lows towards late November ones stalled downward moves three times.

To the upside, the USD/JPY first resistance would be the October 20 cycle high at 114.70. A breach of the latter could pave the way for further USD/JPY gains. The next resistance would be the psychological 115.00 figure, followed by the November 24 cycle high and YTD high at 115.52.

On the flip side, the USD/JPY first demand zone would be the 50-DMA at 113.87. A break beneath that support would open the door for a test of the upslope trendline around the 113.60-75 range, followed by the December 17 pivot low at 113.14.