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  • USD/JPY holds on to the consolidative theme above 109.00.
  • Sentiment around the JPY looks to US yields performance.

USD/JPY adds to Wednesday’s gains and navigates the area of multi-day peaks above the 109.00 mark amidst a steady performance of US yields and a gradual uptick in the greenback.

The strong US economic recovery continues to underpin the renewed positive sentiment around the dollar, which is in turn supported by the steady pace of the vaccination campaign and prospects of extra fiscal stimulus.

In addition, the Biden’s administration appears to be planning an important increase in infrastructure spending, which is also seen adding to the recovery prospects.

Speculations of higher inflation in the months to come and as a direct consequence of rising fiscal spending are expected to keep bolstering the upside momentum in US yields, and therefore support further the idea of extra gains in USD/JPY via a softer Japanese yen.

Later in the US docket, the final Q4 GDP figures will be published along with weekly Claims. Additionally, FOMC’s R.Clarida (permanent voter, dovish) is also due to speak.

Near-term Outlook

Occasional bearish attempts in USD/JPY are forecast to meet support in the 108.40/30 band (recent weekly lows). A breach of this contention zone is not predicted to meet any support of relevance until the 106.20 region, where coincide the 50-day SMA and the February 17 top. On the upside, a surpass of the YTD high at 109.36 (March 15) should open the door to the June 2020 high at 109.85 ahead of the psychological 110.00 mark.