- USD/JPY regained positive traction on Tuesday and jumped back above the 104.00 mark.
- The risk-on mood undermined the safe-haven JPY and was seen driving the pair higher.
- Rallying US bond yields helped offset a modest USD downtick and remained supportive.
The USD/JPY pair held on to its strong intraday gains through the early European session and was last seen hovering near the top end of its daily trading range, just above the 104.00 mark.
A combination of supporting factors assisted the pair to catch some fresh bids on Tuesday and finally break out of its two-day-old consolidative trading range. The global risk sentiment remained well supported by the optimism over the rollout of COVID-19 vaccines and hopes for additional US fiscal stimulus measures. The upbeat market mood undermined demand for the safe-haven Japanese yen and was seen as a key factor driving the USD/JPY pair higher.
Bullish traders further took cues from a fresh leg up in the US Treasury bond yields, which continued pushing higher amid expectations of larger government borrowing. This, in turn, helped offset a modest US dollar pullback from near one-month tops and assisted the USD/JPY to move past the 103.90-95 horizontal resistance. Hence, the uptick could further be attributed to some technical buying on a sustained move beyond the mentioned barrier.
It will now be interesting to see if bulls are able to capitalize on the move or the USD/JPY pair meets with some fresh supply at higher levels. In the absence of any major market-moving economic releases from the US, US Treasury Secretary nominee Janet Yellen’s confirmation hearing might influence the USD price dynamics. This, along with the broader market risk sentiment, could produce some short-term trading opportunities around the USD/JPY pair.