- USD / JPY gains continuation traction for the sixth day in a row on Wednesday.
- The prevailing sentiment of risk appetite weighs on the safe-haven JPY.
- Hopes for additional stimulus in the US and optimism about vaccines fuel risk sentiment.
The pair USD/JPY moves with a slight positive bias at the start of the European session on Wednesday, remaining stable around the key psychological level of 105.00.
The pair has extended its recent gains and has moved higher for the sixth day in a row on Wednesday amid prevailing risk appetite sentiment, which tends to weigh on the safe-haven Japanese yen. Market sentiment remains optimistic amid renewed optimism about additional fiscal stimulus in the US and news of the development of another vaccine for COVID-19.
Democrats in the United States Congress gave the First Steps Toward President Joe Biden’s $ 1.9 Trillion COVID-19 Aid Package without the support of the Republicans. Democrats opened the debate on a 2021 fiscal budget resolution with coronavirus aid spending instructions, unlocking a legislative tool to pass stimulus spending amid Republican opposition.
Investor confidence has been reinforced by the news that the Sputnik V coronavirus vaccine developed in Russia has shown an efficacy rate of 91.6% in the phase 3 trial. This, in turn, has fueled hopes for a strong global economic recovery amid the recent downward trend in novel coronavirus cases, which continues to support market optimism.
Meanwhile, Expectations of increased government indebtedness have continued to drive up US Treasury yields. This has been seen as another factor lending some support to the US dollar, pushing the USD / JPY higher. That said, the rally has lacked strong bullish conviction and the pair has, so far, remained capped below the two-and-a-half-month highs set on Tuesday.
This makes it prudent to wait for some continuation buying before positioning for any short-term bullish moves. Market participants are now awaiting the release of the US ISM Services PMI for further momentum. Apart from this, the broader market risk sentiment could also contribute in generating some opportunities around the USD / JPY pair.
USD / JPY technical levels
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