- USD / JPY gains strong positive traction Thursday amid a shift in risk sentiment.
- Rising expectations of a Fed rate hike acts as a tailwind for the USD and supports the pair’s upward move.
- Concerns about the Omicron variant could prop up the safe-haven JPY and limit any further gains.
The pair USD/JPY it moves higher during the European session on Thursday and rises again above the 113.00 level. At the time of writing, the pair it remains near its daily highs around the 113.20 level.
The pair one more time managed to find some support above 112.50 and attracted new purchases on Thursday amid a strong recovery in global risk sentiment. Despite fears about the new Omicron variant of the coronavirus, a generally positive tone around the stock markets weighed on the safe-haven Japanese yen. This, in turn, was seen as a key factor that offered some support to the USD / JPY pair.
On the other hand, the US dollar struggled to achieve any significant traction and did little to provide any additional boost to the pair. Having said that, Expectations of a more aggressive tightening of monetary policies by the Fed acted as a tailwind for the USD. This, coupled with the rally in US Treasury yields, impressed the bulls and continued to support the USD / JPY move above the round level of 113.00.
However, it remains to be seen if the bulls are able to capitalize on the move or the USD / JPY pair finds new selling at higher levels. Concerns about the economic consequences of the new more transmissible Omicron variant could limit any optimistic movement in the markets. and limit the gains for the USD / JPY pair. Therefore, any further move to the upside could face stiff resistance near the previous day’s high, around the 113.60-65 zone.
Market participants are now awaiting the US economic calendar, which includes the release of Challenger job cuts and weekly data for initial jobless claims. This, coupled with speeches from a number of influential FOMC members, will influence the USD and provide some boost to the USD / JPY pair. Investors will take more cues from events surrounding the coronavirus saga to seize some short-term opportunities.
USD / JPY technical levels
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