- USD / JPY is consolidating the previous day’s decline near two-week lows.
- Risk appetite sentiment weighs on the JPY and offers some support to the pair.
- A weaker USD fails to impress the pair’s bulls and limits any recovery attempts.
The pair USD/JPY moves within a narrow range, near the 104.50 level, at the start of the European session on Wednesday.
The pair lacks a firm directional bias on Wednesday and consolidates the fall of the previous day to monthly lows. A combination of divergent factors has failed to provide significant momentum and has led to moderate and limited price movements within a range during the first half of the trading action.
The US dollar remains weak near two-week lowsamid doubts about a relatively faster US economic recovery following the release of the US jobs report last Friday. This has been seen as one of the key factors that has limited any significant recovery for the USD / JPY pair, at least for now.
The negative factor, to a greater extent, has been offset by the prevailing optimism in the market. The flow of risk appetite has weighed on the safe-haven Japanese yen and has offered some support for the USD / JPY pair. Global risk sentiment has remained underpinned by progress in coronavirus vaccinations
This, coupled with the prospects for a massive fiscal spending plan in the US, has fueled hopes for a strong global economic recovery and has continued to boost investor sentiment. Meanwhile, the market remains divided on the impact of the proposed US $ 1.9 trillion stimulus package.
From a technical perspective, the USD / JPY pair, for now, has managed to find some support near a break point of resistance from a multi-month-old descending trend line. This makes it prudent to wait for a strong continuation of selling before positioning for any further downside moves.
Market participants are now awaiting the US economic calendar, which highlights the release of the latest consumer inflation figures. Data can influence USD price dynamics. Apart from this, the broader market risk sentiment should help investors seize some short-term opportunities.
USD / JPY technical levels
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