- USD / JPY is moving lower on Tuesday amid moderate USD price action.
- Rising US bond yields and underlying bullish sentiment in the markets help limit the pair’s deeper losses.
The pair USD/JPY trades with a slight negative bias at the start of the European session on Tuesday, staying near the lower end of its daily range around region 104.15.
The pair has seen some selling during the first half of trading action on Tuesday and, for now, seems to have stopped its recent strong recovery movement from multi-month lows. The fall it is solely due to a moderate action in the price of the US dollar, although a combination of supporting factors has helped limit the deeper losses for the USD / JPY pair.
Hopes that the president-elect Joe Biden Push for Multi-Trillion Dollar Stimulus Package has continued to support underlying bullish sentiment in financial markets. This, in turn, has led to a modest rally in US equity futures, weighing on the safe-haven Japanese yen and extending some support to the USD / JPY pair.
The pair’s bulls could follow the signs of the current rally in Treasury yields from the United States, triggered by expectations of increased government indebtedness. Investors have been valuing prospects for more aggressive US fiscal spending in 2021, which has brought the benchmark 10-year bond’s yield to the highest level since March.
The positive factors, to some extent, have been offset by political turmoil in the United States, in which House Democrats plan to impeach President Donald Trump on Wednesday unless you resign or are removed from office before that date. This makes it prudent to wait for a sustained move in either direction before investors start positioning for any firm intraday moves.
In the absence of major economic releases from the US, US bond yields could continue to play a role in influencing USD price dynamics. This, coupled with broader market risk sentiment, could build some momentum and allow investors to seize some short-term opportunities on Tuesday.
USD / JPY technical levels
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