- USD/JPY gains traction for the second day in a row and is supported by a combination of factors.
- A positive risk tone weighs on the safe haven JPY and continues to support the pair’s upside move.
- The move higher in US bond yields further inspires the pair’s bulls amid modest USD strength.
The pair USD/JPY moves higher at the start of the European session on Thursday and rises back to the 115.70 regionclose to Monday’s weekly highs.
A combination of supportive factors helped the USD/JPY pair build on the previous day’s strong move and gain some continuation traction for the second day in a row on Thursday. A positive risk tone weighed on the safe-haven Japanese yen and acted as a tailwind amid modest US dollar strength.
Despite growing geopolitical tensions, hopes for ceasefire talks between Russia and Ukraine continued to support a positive tone around the stock markets. In recent developments, Russia has stepped up bombing of Ukrainian cities and Russian forces have captured the Black Sea port of Kherson.
However, the safe-haven demand unleashed by the Russian invasion of Ukraine last week seems to have eased somewhat, which was seen as a key factor weighing on the JPY. On the other hand, the dollar gained support from the previous day’s move higher in yields of US Treasuries, which also contributed to the rally of the USD/JPY pair.
Fed Chairman Jerome Powell, during his semi-annual testimony to Congress, said that the US central bank would begin to carefully raise interest rates in March. Powell simultaneously promised that the Fed could take tougher action if inflation levels don’t come down and push US bond yields higher.
However, it remains to be seen whether bulls in the pair are able to capitalize on the move or USD/JPY finds fresh selling at higher levels as investors remain wary of the situation in Ukraine. Therefore, it will be prudent to wait for a strong continuation buy before positioning for a further move higher.
Market participants now await the release of the usual data on US initial jobless claims. This, along with Fed Chairman Jerome Powell’s second day of testimony before the Senate Banking Committee and yields on the US bonds, will weigh on the USD and could provide some momentum to the USD/JPY pair.
USD/JPY technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
