- USD/JPY regained traction on Wednesday amid a strong rebound in the equity markets.
- Bulls further took cues from a pickup in the US bond yields and shrugged off softer USD.
- Technical buying above the 105.75-80 region contributed to the intraday positive move.
The USD/JPY pair spiked to fresh three-week tops during the early European session, with bulls now eyeing to reclaim the 106.00 round-figure mark.
Following the previous day’s modest downtick, the pair caught some fresh bids on Wednesday and added to this week’s positive move. A strong rebound in the equity markets undermined the safe-haven Japanese yen and was seen as one of the key factors extending some support to the USD/JPY pair.
It is worth recalling that the US President Donald Trump’s decision to cancel talks with Democrats on stimulus package fueled concerns about the already shaky US economic recovery. This, in turn, led to a steep fall in the US equity markets on Tuesday, though the reaction turned out to be short-lived.
Bullish traders further took cues from a strong pickup in the US Treasury bond yields and seemed rather unaffected by a modest US dollar pullback. This, coupled with technical buying above the 105.75-80 supply zone, provided an additional boost to the USD/JPY pair’s strong positive move.
Some follow-through buying above the 106.00 mark should pave the way for a move towards challenging 100-day SMA resistance, near the 106.25-30 region. Market participants now look forward to the release of the latest FOMC monetary policy meeting minutes, which should produce some trading impetus.
Technical levels to watch
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