USD/JPY climbs to over one-week tops, beyond mid-104.00s

• USD/JPY gained strong positive traction for the third consecutive session on Thursday.
• COVID-19 vaccine optimism undermined the safe-haven JPY and remained supportive.
• Bulls seemed rather unaffected by a subdued USD demand amid stalled US stimulus talks.

The USD/JPY pair added to its intraday gains and shot to over one-week tops, around the 104.55-60 region during the first half of the European session.

The pair built on this week’s rebound from sub-104.00 level and continued scaling higher for the third consecutive session on Thursday. The momentum assisted the USD/JPY pair to post gains for the fourth day in the previous five and seemed rather unaffected by a subdued US dollar price action.

Despite the lack of consensus over additional US fiscal measures, the global risk sentiment remained well supported by the optimism over the rollout of the COVID-19 vaccine. This, in turn, undermined demand for the safe-haven Japanese yen and pushed the USD/JPY pair higher.

On the other hand, the greenback lacked any firm directional bias and remained confined in a range amid doubts on whether the Republicans and Democrats can agree to the proposed relief package. The US lawmakers approved a stopgap government funding bill on Wednesday, which will delay a government shutdown to December 18.

Apart from this, a weaker tone surrounding the US Treasury bond yields further collaborated to keep the USD bulls on the defensive. That said, possibilities of some intraday stops being triggered above 200-hour SMA seemed to support the USD/JPY pair’s strong move up.

Market participants now look forward to the US economic docket, highlighting the releases of the latest consumer inflation figures and Initial Weekly Jobless Claims. The data, along with the US stimulus headlines, will influence the USD and produce some short-term trading opportunities around the USD/JPY pair.

Technical levels to watch