- USD / JPY is moving slightly higher at the start of the European session on Thursday.
- The underlying bullish sentiment weighs on the safe haven JPY and offers some support for the pair.
- A modest USD strength remains supportive, although softer US bond yields limit gains.
The pair USD/JPY it is moving slightly higher at the start of the European session on Thursday, staying above the 110.00 level. At the time of writing, the pair is holding on to gains close to daily highs around the 110.20 region.
The pair is struggling to capitalize on the positive move of the previous day and find acceptance above the key psychological level of 110.00 on Thursday. The Underlying bullish sentiment in stock markets continues to weigh on the Japanese yen safe haven. This, coupled with a modest pickup in demand for the US dollar, has acted as a tailwind for the USD / JPY pair.
Global risk sentiment remains supported by the fact that the United States Food and Drug Administration (FDA) granted full approval to Pfizer / BioNTech’s COVID-19 vaccine on Monday. In addition to this, the comments of the leading American expert on infectious diseases, Dr. Anthony Fauci, saying that covid-19 could be under control early next year they further boosted investor confidence.
Meanwhile, the dollar has benefited from the expectations that the Fed could still begin to reverse its pandemic-era stimulus in 2021. This pushed the benchmark 10-year US government bond yield to 1.3474% on Wednesday. That said, a modest pullback in US Treasury yields has prevented dollar bulls from opening new positions, limiting gains in the USD / JPY pair.
Investors also seem reluctant and prefer to wait on the sidelines before Fed Chairman Jerome Powell’s speech, at the Jackson Hole Symposium. Powell’s comments will be examined for further clues as to the likely timing of the Fed’s downsizing plan. This will influence short-term USD price dynamics and provide further directional momentum to the USD / JPY pair.
In the meantime, investors could take cues from the release on Thursday of the US GDP (second estimate) and the initial weekly jobless claims at the start of the American session. This, coupled with US bond yields and broader market risk sentiment, could generate some short-term opportunities around the USD / JPY pair.
USD / JPY technical levels

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