- A combination of factors helps the USD / JPY regain some positive traction on Wednesday.
- A rally in US bond yields benefits the USD and provided a modest boost to the pair.
- The underlying bullish sentiment weighs on the safe-haven JPY and supports the pair’s upward move.
The pair USD/JPY holds firm at the start of the European session on Wednesday, trading just below daily highs around the region of 109.75.
The pair has moved higher during the first half of trading action on Wednesday and has moved away from a week-long lows, around the 109.40 area touched on the previous day. The rebound has been seen supported by a modest strength of the US dollar and a positive risk tone, which tends to weigh on the demand for the Japanese yen as a safe haven.
The dollar has had its recent sharp decline backward, from a nine-and-a-half-month high, amid expectations that the Fed could still begin to reverse its pandemic-era stimulus in 2021. The bulls also took cues from US Treasury yields, which offered even more support to the US dollar and the USD / JPY pair.
In the meantime, Global Risk Sentiment Rises After China Says It Has Stopped The Community Spread Of COVID-19, which has restored confidence in the country’s growth dynamics. In addition to this, the United States Food and Drug Administration (FDA) granted full approval to Pfizer / BioNTech’s vaccine for COVID-19 and fueled investor appetite for riskier assets.
Despite the supporting factors, the rally lacks strong bullish convictionas investors prefer to wait on the sidelines before Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium. Powell’s remarks will be scrutinized for clues as to the likely timing of the Fed’s downsizing plan, which will boost the dollar in the near term.
In the meantime, investors could take cues from Wednesday’s release of data from durable goods orders from the United States. This, coupled with US bond yields, could influence USD price dynamics and provide further boost to the USD / JPY pair. Apart from this, the broader risk sentiment in the market could also produce some short-term opportunities.
USD / JPY technical levels
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