USD / JPY clings to gains near daily highs around 109.50 region

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  • Risk appetite weighs on the safe-haven JPY and helps USD / JPY regain upside traction.
  • The BoJ’s monetary policy decision does little to give a significant boost to the pair.
  • The market focus remains the outcome of the two-day FOMC meeting on Wednesday.

The pair USD/JPY has built on its steady intraday rise and has risen to new daily highs, just above the 109.50 level, at the start of the European session on Wednesday. At the time of writing, the pair is pulling back slightly and hovering around 109.45.

The pair has once again achieved find decent support and attract new purchases near the 109.10 region Wednesday amid the appetite for risk in the markets. The real estate giant Evergrande in China he has said he would make an upcoming bond coupon and alleviate immediate fears of a corporate collapse. This, in turn, has boosted global risk sentiment, which has weighed on the Japanese safe-haven yen and provided a good boost to the USD / JPY pair.

The JPY has been further affected by the willingness of the Bank of Japan (BoJ) to maintain its ultra-flexible monetary policy stance amid the economic slowdown caused by the coronavirus pandemic. Earlier in the day, the Japanese central bank has left its benchmark interest rates and target for the 10-year JGB unchanged at -0.1% and around zero, respectively. The BoJ has also reiterated that it would buy JGB without an upper limit.

Secondly, The US dollar has continued to receive some support from expectations of an imminent Fed announcement and a modest rebound in bond yields. from the US Treasury. Therefore, the market focus will remain on the outcome of the two-day FOMC meeting. The Fed is expected to announce its decision later during the American session on Wednesday and investors will look for new clues as to the likely timing of the tapering plan.

Apart from this, the latest economic projections, especially the so-called dot chart, will play a key role in influencing the short-term price dynamics of the USD. This, along with broader market risk sentiment, should help investors determine the next directional move for the USD / JPY pair.

USD / JPY technical levels

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