- USD/JPY struggled to capitalize on the overnight positive move and remained confined in a range.
- The upbeat market mood undermined the safe-haven JPY and extended some support to the pair.
- The prevalent selling bias surrounding the USD failed to provide any impetus and capped gains.
The USD/JPY pair lacked any firm directional bias and remained confined in a range, above the 104.00 mark through the Asian session.
A combination of diverging forces failed to assist the pair to capitalize on the overnight positive move of around 25 pips and led to a subdued/range-bound price action on Wednesday. Positive news on COVID-19 vaccines boosted investors’ confidence and undermined demand for the safe-haven Japanese yen. This, in turn, was seen as one of the key factors lending some support to the USD/JPY pair.
In the latest development, Britain on Tuesday became the first Western nation to begin a vaccination campaign. Johnson & Johnson reported that it could obtain late-stage trial results for a single-dose vaccine in January, earlier than expected. Separately, Pfizer cleared another hurdle after the US Food and Drug Administration (FDA) released documents flagging no new safety or efficacy concerns.
Investors further cheered the ongoing efforts to launch more fiscal stimulus to support the US economy and help offset the impact of the pandemic. The supporting factors, however, were largely offset by the emergence of some fresh selling around the US dollar. Even a goodish pickup in the US Treasury bond yields failed to impress the USD bulls or provide any meaningful impetus to the USD/JPY pair.
There isn’t any major market-moving economic data due for release from the US on Wednesday. Hence, the broader market risk sentiment should continue to influence the USD/JPY pair. This, along with the US fiscal stimulus headlines and the USD price dynamics will also be looked upon for some short-term trading opportunities.
Technical levels to watch
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