USD/JPY holds above 105.00 as Wall Street rally picks up steam

USD/JPY touched its highest level in more than two months above 105.00.
Wall Street’s main indexes are posting impressive gains.
US Dollar Index continues to push higher above 91.00.

The USD/JPY pair extended its rally into the fifth straight day on Tuesday and touched its highest level since November 12 at 105.18. As of writing, the pair was up 0.2% on a daily basis at 105.10.

Risk flows continue to dominate financial markets

The risk-on market environment and the broad USD strength continue to help USD/JPY push higher. Renewed hopes for additional fiscal stimulus in the US and easing concerns over the retail trading frenzy seem to be allowing Wall Street’s main indexes to rise sharply for the second day in a row.

At the moment, the Dow Jones Industrial Average and the S&P 500 indexes are up 1.9% and 1.7%, respectively, making it difficult for the JPY to find demand as a safe-haven. 

Meanwhile, the US Dollar Index is trading at its strongest level in two months at 91.25 supported by rising US Treasury bond yields.

Earlier in the day, the data from the US showed that the IBD/TIPP Economic Optimism Index in February improved to 51.9 from 50.1 in January and beat the market expectation of 51. On a negative note, the ISM-NY Business Conditions Index slumped to 51.2 in January from 61.3 in December.

On Wednesday, the Jibun Bank Services PMI data will be featured in the Japanese economic docket.

Technical levels to watch for