- Market optimism weighs on the safe haven JPY and offers USD / JPY some support.
- The pullback in US bond yields keeps dollar bulls on the defensive and limits the pair’s rally.
- Investors are now waiting for the US ISM Manufacturing PMI for significant new business momentum.
The pair USD/JPY remains stuck within a narrow trading range around the region of 106.50 at the start of the European session on Monday, consolidating its recent gains to multi-month highs.
A combination of divergent factors has failed to provide significant momentum to the pair and has led to moderate in-range price movements during the first half of Monday’s trading action. New momentum in stocks has weighed on the safe-haven Japanese yen and it has offered some support for the USD / JPY pair. Nevertheless, the pullback in US bond yields has kept US dollar bulls on the defensive and it has limited the rise of the pair, at least for now.
The progress of a massive US fiscal spending plan has added to recent optimism about a strong global economic recovery. In fact, the House of Representatives approved the $ 1.9 trillion aid package on Saturday proposed by US President Joe Biden and led the way to secure congressional approval. This comes amid the impressive rate of COVID-19 vaccination and increased investor sentiment, which in turn has weighed on traditional safe-haven currencies such as the JPY.
On the other hand, the USD has come under pressure from a subsequent pullback in US Treasury yields. from the highs of more than a year touched last week. This has been seen as a key factor that has limited any further gains for the USD / JPY pair. That said, the lack of significant selling favors the bulls and supports prospects for an extension of last week’s strong positive move of over 150 pips from levels below the key psychological region of 105.00.
Market participants are now looking forward to the US economic calendar, highlighted by the ISM manufacturing PMI release. This, along with US bond yields, will influence USD price dynamics and could build some momentum. Apart from this, investors could follow the signals of the broader market risk sentiment to take advantage of some short-term opportunities.
USD / JPY technical levels
.
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.
