- USD / JPY gains strong positive traction for the second day in a row on Wednesday.
- A rally in equity markets weighs on the safe-haven Japanese yen and supports the pair’s upward move.
- The bulls also took signs of a rebound in US bond yields, although a weak USD limits gains.
The pair USD/JPY is spreading its strong intraday gains and has reached new weekly highs, around the 105.85 region, before the opening of the American session on Wednesday.
The pair has built on the good bounce of the previous day, from below the key psychological level of 105.00, and has gained some continuation traction for the second day in a row on Wednesday.
The initial rally has received an additional boost from a change in risk appetite in equity markets, which tends to weigh on the safe-haven Japanese yen. Global risk appetite sentiment has remained supported by progress on COVID-19 vaccination and stimulus package proposed by US President Joe Biden of 1.9 trillion dollars.
Meanwhile, the US bond market has continued to react to prospects for a massive fiscal spending plan in the US. This has been evident by a new momentum in Treasury yields, which has further inspired the pair’s bulls and has continued to support the strong positive intraday movement for USD / JPY.
Nevertheless, the US dollar has not benefited from a rally in US bond yields. This appears to be the only factor that could prevent investors from opening aggressive bullish positions. and limit any uncontrolled rally in the USD / JPY pair amid the absence of relevant US economic releases.
Market participants are now awaiting Powell’s second day of testimony before the House Financial Services Committee, which could influence US bond yields and the USD. This, along with the broader market risk sentiment, could generate some short-term opportunities around the USD / JPY pair.
USD / JPY technical levels
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