- A combination of factors helps USD / JPY rebound from below the 105.00 region.
- Market optimism weighs on the safe haven JPY and offers some support to the pair.
- A modest rally in the USD from multi-week lows remains supportive ahead of Powell’s testimony.
The pair USD/JPY has built on its intraday recovery from a week and a half lows and has risen to new daily highs at 105.25-30 during the first half of the European session on Tuesday.
Having shown some resistance below the key psychological level of 105.00, the pair has rebounded on Tuesday and for now, appears to have halted its recent sharp pullback from the five-month highs, around the region of 106.20-25. The rally has allowed the USD / JPY pair break four consecutive days of losses and it is due to a combination of supporting factors.
The impressive rate of vaccination for COVID-19 has been fueling the hopes for a strong global economic recovery. This, along with the progress on the $ 1.9 trillion stimulus package nominated by United States President Joe Biden has continued to boost investor confidence. This, in turn, has weighed on the safe haven Japanese yen and has offered some support for the USD / JPY pair.
Apart of this, a good intraday bounce of the US dollar from the six-week lows has provided additional boost to the USD / JPY pair and has continued to support the positive intraday movement. That said, a modest pullback in US Treasury yields could prevent bulls from opening aggressive positions and help limit any wild rallies in the pair, at least for now.
Investors might also prefer to wait on the sidelines before Fed Chairman Jerome Powell’s testimony before the Senate Banking Committee. Meanwhile, the release of the US Conference Board Consumer Confidence Index could influence USD price dynamics and help investors seize some near-term opportunities around USD / JPY.
USD / JPY technical levels
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