- USD/JPY was seen building on the overnight bounce from multi-day lows.
- Receding safe-haven demand weighed on the JPY and helped gain traction.
- A pickup in the US bond yields underpinned the USD and remains supportive.
The USD/JPY pair maintained its bid tone through the early European session and was seen trading near the top end of its daily trading range, just above the key 110.00 psychological mark.
The pair built on the previous session’s goodish intraday bounce from multi-day lows and gained some follow-through traction on Wednesday amid improving global risk sentiment, which tends to undermine the Japanese yen’s perceived safe-haven status.
USD/JPY supported by improving risk sentiment, stronger USD
Despite mounting concerns over deepening economic fallout from the coronavirus outbreak in China, a slowdown in new cases led to a modest recovery in the equity markets and was seen weighing on traditional safe-haven assets.
This was further reinforced by a modest pickup in the US Treasury bond yields, which remained supportive of the prevailing strong bullish sentiment surrounding the US dollar and provided an additional boost to the pair’s positive move.
It, however, remains to be seen if the pair is able to capitalize on the positive momentum or runs out of the steam near January monthly swing highs resistance near the 110.20 region. A convincing break through should set the stage for the extension of the recent positive move witnessed since the beginning of this February.
Moving ahead, market participants now look forward to the US economic docket, featuring the release of housing market data and Producer Price Index. This coupled with speeches by influential FOMC members might influence the USD price dynamics and produce some meaningful trading opportunities.
Technical levels to watch
Share
