- A combination of supporting factors assisted the USD/JPY pair to rebound from sub-105.00 levels.
- The upbeat market mood undermined the safe-haven JPY and extended some support to the pair.
- A modest USD rebound from multi-week lows remained supportive ahead of Powell’s testimony.
The USD/JPY pair built on its steady intraday recovery from one-and-half-week lows and touched an intraday high level of 105.25-30 during the first half of the European session.
Having shown some resilience below the key 105.00 psychological mark, the pair goodish rebound on Tuesday and for now, seems to have stalled its recent sharp pullback from five-month tops, around the 106.20-25 region. The uptick allowed the USD/JPY pair to snap four consecutive days of the losing streak and was sponsored by a combination of supporting factors.
The impressive pace of COVID-19 vaccinations has been fueling hopes for a strong global economic recovery. This, along with the progress on US President Joe Biden’s proposed $1.9 trillion stimulus package, continued boosting investors’ confidence. This, in turn, undermined the safe-haven Japanese yen and extended some support to the USD/JPY pair.
Apart from this, a goodish intraday US dollar rebound from six-week lows provided an additional boost to the USD/JPY pair and remained supportive of the intraday positive move. That said, a modest pullback in the US Treasury bond yields might hold bullish traders from placing aggressive bets and keep a lid on any runaway rally, at least for the time being.
Investors might also prefer to wait on the sidelines ahead of the Fed Chair Jerome Powell’s testimony before the Senate Banking Committee. In the meantime, the release of the Conference Board’s US Consumer Confidence Index might influence the USD price dynamics and assist traders to grab some short-term opportunities around the USD/JPY pair.
Technical levels to watch
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