- USD / JPY is struggling to capitalize on the positive movement of the previous day and remains trapped within a range.
- The bullish market sentiment weighs on the safe haven JPY and offers some support to the pair.
- The prevailing sell bias around the USD does not provide any momentum and limits the pair’s gains.
The pair USD/JPY lacks a firm directional bias and remains trapped within a tight range of about 15 pips, above the round level of 104.00, at the start of the European session on Wednesday.
A combination of divergent factors has been unable to help the pair capitalize on the previous day’s positive move of around 25 pips and has led to moderate and range-bound price action on Wednesday. The positive news about COVID-19 vaccines have boosted investor confidence and have weighed on the Japanese yen’s demand for safe haven. This, in turn, has been seen as one of the key factors lending some support to the USD / JPY pair.
In the latest development, the UK became the first western nation to start a vaccination campaign on Tuesday. Johnson & Johnson said it could get late-stage trial results for a single-dose vaccine in January sooner than expected. On the other hand, Pfizer overcame another hurdle after the US Food and Drug Administration (FDA) released documents that do not point to new safety or efficacy concerns.
Investors have also welcomed current efforts to launch more fiscal stimulus to support the US economy and help offset the impact of the pandemic. However, the supporting factors have been largely offset by the emergence of new sales around the US dollar. Even a good recovery in US Treasury yields has failed to impress the USD bulls or provide any significant boost to the USD / JPY pair.
There is no major economic data release in the United States on Wednesday. Therefore, the broader market risk sentiment should continue to influence the USD / JPY pair. This, coupled with the news of the US fiscal stimulus and the dynamics of US dollar prices, could generate some short-term business opportunities.
USD / JPY technical levels
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