USD / JPY rises to daily highs near 104.70-75 area, lacks continuation

  • Risk appetite weighs on the safe haven JPY and helps the USD / JPY gain some traction.
  • Falling US bond yields keep USD bulls on the defensive and limit the pair’s rally.

The pair USD/JPY it has risen to daily highs during the European session on Thursday, although it has lacked continuation. At the time of writing, the pair remains with modest daily gains around the 104.70 region.

The pair has gained some positive traction during the early part of the European session and has finally broken its consolidation range from the Asian session. The rally has moved the USD / JPY pair away from the monthly lows set on Wednesday and is due to the prevailing sentiment of appetite for risk, which tends to weigh on the safe-haven Japanese yen.

Global risk sentiment remains backed by optimism about progress on coronavirus vaccine launch. This, coupled with the $ 1.9 trillion stimulus package proposed by US President Joe Biden, has fueled hopes for a strong economic recovery and continued to boost investor confidence.

Meanwhile, the support factor has been more offset by a moderate action in the price of the US dollar and US Treasury yields In fact, the US dollar remains under pressure near its two-week lows and has seen affected by weaker consumer inflation figures on Wednesday in the US and the pessimistic comments of Fed Chairman Jerome Powell.

This, in turn, has prevented the bulls from opening aggressive positions and limited any significant rally for the USD / JPY pair, at least for the time being. Therefore, it will be prudent to wait for some subsequent purchases above the highs of the previous day, around the 104.85 region, before positioning for further gains.

Market participants are now awaiting the US economic calendar highlighting the release of initial weekly jobless claims for fresh momentum. Aside from this, broader market risk sentiment, US bond yields, and USD price dynamics could also generate some short-term trading opportunities around USD / JPY.

USD / JPY technical levels

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