- USD/JPY captures some buying on Wednesday and is supported by broad USD strength.
- The escalation of the conflict between Russia and Ukraine benefits the USD as a global reserve currency.
- A modest rebound in US bond yields benefits the USD and supports the pair’s move higher.
The pair USD/JPY has been gaining traction to the upside during the European session on Wednesday. At the time of writing, the pair holds near daily highs around the 115.25 region.
After an initial drop to the 114.80 regionthe USD/JPY pair captured fresh buying on Wednesday and for now, seems to have broken two consecutive days of losing streak. The rebound is due exclusively to a renewed buying interest around the US dollar and seemed unaffected by cautious market sentiment, which tends to benefit the safe-haven Japanese yen.
A new escalation in the conflict between Russia and Ukraine kept investors on the sidelines, which in turn was seen as a key factor that benefited the USD as a global reserve currency. In fact, the news indicated that Russia has intensified the bombing of Ukrainian cities and a large Russian convoy was approaching the Kiev.
Apart of this, a modest rebound in US Treasury bond yields further supported the dollar and acted as a tailwind for the USD/JPY pair. Having said that, expectations that the Fed would refrain from adopting a more aggressive monetary policy response amid recent geopolitical events limited the rise in US bond yields and the dollarat least for now.
This could prevent investors from opening new aggressive bullish positions around the USD/JPY pair and warrants caution before positioning for any further moves higher. Market participants now await the release of the US ADP report on private sector employment and Fed Chairman Jerome Powell’s testimony before the House Financial Services Committee.
However, the key focus remains on the resumption of peace talks between Russia and Ukraine on Wednesday. Incoming news will play a key role in influencing broader market risk sentiment and allow investors to take advantage of some significant opportunities around the USD/JPY pair.
USD/JPY technical levels
Source: Fx Street
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.
