- A combination of factors assisted USD/JPY to stage a modest bounce from one-week lows.
- The underlying bullish sentiment undermined the safe-haven JPY and remained supportive.
- A modest USD uptick provided an additional boost, though sliding US bond yields capped gains.
The USD/JPY pair built on its intraday bounce from one-and-half-week lows and refreshed daily tops during the early European session. The pair was trading with gains of around 0.20%, just below the key 110.00 psychological mark.
The pair attracted some dip-buying on Wednesday and for now, seems to have stalled its recent corrective slide from the vicinity of the 111.00 mark, or one-year tops touched last week. The uptick marked the first day of a positive move in the previous three trading session and was sponsored by a combination of factors.
The underlying bullish sentiment surrounding the equity markets undermined demand for the safe-haven Japanese yen and was seen as a key factor extending some support to the USD/JPY pair. Apart from this, a modest US dollar rebound from two-week lows further contributed to the USD/JPY pair’s recovery from the 109.60-55 region.
The greenback found some support at lower levels amid the prospects for a relatively faster US economic recovery from the pandemic. That said, the ongoing decline in the US Treasury bond yields held the USD bulls from placing aggressive bets and might keep a lid on any strong gains for the USD/JPY pair, at least for now.
Investors might also refrain from placing aggressive bets, rather prefer to wait on the sidelines ahead of Wednesday’s release of the FOMC meeting minutes. Given that the markets expect the Fed to hike rates sooner than anticipated, any clues that the conditions to begin tightening were discussed should provide a fresh lift to the USD/JPY pair.
Technical levels to watch
Share
