- USD/JPY gained positive traction for the second consecutive session on Wednesday.
- The uptick seemed rather unaffected by retreating US bond yields and weaker USD.
- Even a softer risk tone failed to benefit the safe-haven JPY or hinder the momentum.
The USD/JPY pair maintained its bid tone through the early European session and was last seen trading near two-day tops, around mid-105.00s.
The pair built on the previous day’s goodish rebound from levels below the key 105.00 psychological mark and gained positive traction for the second consecutive session on Wednesday. The uptick lacked any obvious fundamental catalyst and even seemed rather unaffected by a combination of negative factors.
During the first day of his semi-annual testimony before the Congress, Fed Chair Jerome Powell on Tuesday reiterated a very dovish policy stance and led to a modest pullback in the US Treasury bond yields. Powell said that interest rates will remain low and the Fed will keep buying bonds to support the US economic recovery.
Retreating US bond yields kept the US dollar bulls on the defensive through the first half of the trading action on Wednesday, albeit did little to hinder the USD/JPY pair’s intraday positive move. Bulls even shrugged off a softer tone around the equity markets, which tends to benefit the safe-haven Japanese yen.
Meanwhile, the impressive pace of COVID-19 vaccinations and the progress on a massive US fiscal spending plan continued fueling hopes for a strong global economic recovery. In fact, House Majority Leader Steny Hoyer said that a vote on US President Joe Biden’s proposed $1.9 trillion stimulus package will be held on Friday.
This seemed to be the only factor driving the USD/JPY pair higher, though the upside is likely to remain capped amid absent relevant market-moving economic releases. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move, back towards the 106.00 round-figure mark.
Technical levels to watch
Share
