- USD/JPY is moving higher for the third day in a row and rises to a nearly one-month high on Wednesday.
- The gloomy Japanese GDP report and risk appetite weighs on the safe haven JPY and supports the pair’s move higher.
- The bulls are also taking cues from a rebound in US bond yields and seem unaffected by a weaker dollar.
The pair USD/JPY moves higher during the first half of the European session on Wednesday and rises around the 115.85 region, at four-week highs.
The pair continued its upward trajectory from earlier this week and gained continuation traction for the third day in a row on Wednesday. A downward revision to Japan’s growth weighed on the Japanese yen, which came under further pressure from a strong recovery in risk appetite sentiment.. This, in turn, was seen as a key factor that acted as a tailwind for the USD/JPY pair.
According to revised data released Wednesday, the Japanese economy grew by 1.1% during the October-December period compared to the preliminary reading of 1.3%. What’s more, the annual rate of GDP growth stood at 4.6%, compared to an increase of 5.4% estimated previously. The data raised concerns about further downside risk amid the Ukraine crisis and persistent supply disruptions.
The bulls of the pair took even more indications of a nice rally in equity markets and a rally in US Treasury yields. Recent gains in commodity prices following the Russian invasion of Ukraine fueled concerns about a major inflation shock to the global economy and fears of stagflation. This, in turn, acted as a tailwind for US bond yields and should limit losses around the US dollar.
The fundamental backdrop seems tilted in favor of the bulls and a move above the 116.00 level, towards the test of the yearly highs around the 116.35 region touched in February. In the US economic calendar on Wednesday, the publication of JOLTS vacancies stands out, which will be announced at the beginning of the American session. The data could do little to influence USD price dynamics or provide any lift to the USD/JPY pair, as the focus remains glued to new developments around the Russia-Ukraine war.
USD/JPY technical levels
Source: Fx Street
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