- A combination of factors helps the USD / JPY regain positive traction on Wednesday.
- The optimistic economic outlook weighs on the safe-haven JPY and offers some support to the pair.
- A modest rally in the USD provides additional momentum ahead of the US macroeconomic releases.
The pair USD/JPY maintains its intraday gains at the start of the European session on Wednesday, staying close to daily highs around the 106.85 region.
Following the previous day’s pullback from near the 107.00 level at six-month highs, the pair has captured further buying and has been supported by a combination of factors. New momentum in stock markets has weighed on the safe-haven Japanese yen. Apart from this, a modest rally in the US dollar has helped the USD / JPY pair to regain positive traction.
Global risk sentiment has remained supported by optimism that a massive US fiscal spending plan will fuel economic recovery global. This, coupled with the impressive rate of vaccination against the coronavirus, has continued to boost investor sentiment and has continued to support the underlying bullish tone in financial markets.
Meanwhile, reflation trading has forced investors to assess a possible rebound in inflation and has raised doubts that the Fed would keep interest rates ultra-low for a longer period. Furthermore, expectations of a relatively faster US economic recovery from the pandemic have benefited the dollar and offered some additional support to the USD / JPY pair.
However, the pullback in US Treasury yields could prevent the bulls from opening new positions and limit gains for the USD / JPY amid mild overbought conditions. Therefore, It remains to be seen if the bulls can capitalize on the move or have a hard time conquering the 107.00 level., as the focus now shifts to US macroeconomic releases for fresh momentum.
Featured on Wednesday’s US economic calendar are the releases of the ADP report on private sector employment and the ISM services PMI. The data, along with US bond yields, will play a key role in influencing USD price dynamics. Investors could follow the signs of the broader market risk sentiment to seize some significant 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.
