- USD / JPY remains trapped within a tight range at the start of the European session.
- The pullback in US bond yields keeps USD bulls on the defensive and limits the pair’s gains.
- The optimistic US economic outlook supports the prospects for an extension of the pair’s recent bullish move.
The pair USD/JPY has lacked a firm directional bias on Thursday and has remained trapped within a range above the 110.50 level at the start of the European session.
A combination of factors has failed to provide any significant momentum and has forced the pair to consolidate its recent strong positive move towards the 111.00 region, in one-year highs hit on Wednesday. The yield on the 10-year US government bond has receded further from the 14-month highs and has fallen to the 1.70% threshold. This, in turn, has kept the US dollar bulls on the defensive and limited the rise of the USD / JPY pair.
Having said that, decline remains supported amid underlying bullish sentiment around USD. The impressive rate of vaccination against the coronavirus and the spending plan of US President Joe Biden have fueled the expectations of a relatively faster US economic recovery from the pandemic. The upbeat outlook should continue to prop up the dollar and help limit any significant corrective declines for the USD / JPY pair.
It is worth reporting that Biden recently announced the opening of the COVID-19 vaccination program for 90% of American adults by April 19 and also introduced a $ 2.3 trillion infrastructure package. Wednesday’s mostly upbeat US macroeconomic releases (the ADP report and Chicago Manufacturing PMI) bolstered the optimistic outlook for the US economy. That said, overbought conditions on short-term charts could prevent investors from opening new bullish positions.
Nevertheless, path of least resistance for USD / JPY remains up And any significant pullback could be seen as a buying opportunity. Market participants are looking forward to Wednesday’s release of the US ISM Manufacturing PMi, which will be released at the start of the US session. However, the key focus of attention will continue to be on the monthly US NFP jobs report to be released on Friday.
USD / JPY technical levels
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