- A modest rally in the USD helps the USD / JPY regain positive traction on Wednesday.
- Softer risk sentiment benefits the safe haven JPY and limits the pair’s rally.
- Investors expect US durable goods order data ahead of the FOMC decision.
The pair USD/JPY it maintains its modest daily gains at the start of the European session on Wednesday, although it lacks a strong continuation buy. The pair has remained within the range of the previous day, trading around the 103.65-70 region.
The US dollar has risen little by little during the first half of trading action on Wednesday, which in turn has been seen as one of the key factors that have provided a modest rise to the USD / JPY pair. Having said that, the prevailing cautious sentiment in equity markets has benefited the safe-haven Japanese yen and limited any significant rises.
Investors remain concerned about possible economic consequences of the continued increase in new coronavirus cases and the imposition of new restrictions. Apart from this, doubts about the timing and size of a new US economic stimulus package and the escalation in tensions between the US and China in the South China Sea they have further clouded market sentiment.
Meanwhile, the slightest appetite for risk has been seen bolstered by falling US Treasury yields. This has prevented the USD bulls from opening aggressive positions and has helped limit strong gains in the USD / JPY pair. Investors also seem reluctant and prefer to stay on the sidelines before the FOMC decision later this Wednesday.
Before the key event, the release of US durable goods order data could influence USD price dynamics and provide some momentum. Investors could follow the signs of broader market risk sentiment, developments around the coronavirus saga, and news of US stimulus to seize some near-term opportunities.
USD / JPY technical levels
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