USD/JPY consolidates French election-led risk-on rally around 110.00

The bulls appear to face exhaustion and take a breather, allowing a brief phase of upside consolidation in USD/JPY around 110 handle, after the latest upsurge.

The USD/JPY pair witnessed a bullish opening gap the start of a new week, as a renewed risk-on wave hit the markets after the outcome of the first round of the French election saw Macron and Le Pen taking the lead for the Round 2 scheduled this Sunday.

Risk-on sentiment drove markets across the board, sending the Asian stocks and US yields sharply higher, as investors resorted to take the yield advantage at the expense of the safe-haven yen, gold etc.

However, the major failed to sustain the rally above 110.50 levels, as broad based US dollar sell-off triggered by a massive rally in EUR/USD capped the upside momentum.

Markets now await the sentiment on the European open for the next push higher in the major, while the US docket holds nothing of relevance except for the FOMC member Kashkari’s speech.

USD/JPY Technical levels                 

A break above 110.50/55 (psychological levels/ 9-day high) would expose 110.97 (Apr 11 high) and 111.47/58 (Apr 5 & 10 high). On the other hand, a breach of support at 109.86/85 (daily low/ 20-DMA) could yield a test of 109.47 (5-DMA) and 109.07 (10-DMA).