- A combination of factors helps the USD / JPY make a modest bounce from the one-week lows.
- The underlying bullish sentiment weighs on the safe-haven JPY and remains supportive for the pair.
- A modest rally in the USD provides additional boost, although falling US bond yields limit gains.
The pair USD/JPY It has built on its intraday bounce from the week and a half lows and reached new daily highs during the European session on Wednesday. The pair moves with gains of around 0.15%, just below the key psychological level of 110.00.
The pair has captured some buying at lower levels on Wednesday and, for now, appears to have halted its recent corrective decline from near the 111.00 level, at the one-year highs hit last week. The rally marks the first day of positive movement in the previous three sessions and is due to a combination of factors.
The underlying bullish sentiment around the stock markets has weighed on demand for the Japanese yen as a safe haven and has been considered a key factor offering some support to the USD / JPY pair. Apart from this, a modest rally in the US dollar from the two-week lows has further contributed to the recovery of the USD / JPY pair from the 109.60-55 region.
The dollar has found some support at lower levels amid prospects for a relatively faster economic recovery the United States from the pandemic. That said, the current drop in US Treasury yields has prevented USD bulls from opening aggressive positions and could limit strong gains for the USD / JPY pair, at least for now.
Investors could also refrain from opening aggressive positions and prefer to wait on the sidelines before the release of the minutes of the FOMC meeting on Wednesday. With markets expecting the Fed to raise rates earlier than expected, any indication that conditions to begin tightening its monetary policy were discussed should provide further boost to the USD / JPY pair.
USD / JPY technical levels
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