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  • USD/JPY was seen consolidating the overnight slump to near two-week lows.
  • The risk-on mood undermined the safe-haven JPY and extended some support.
  • Weaker USD failed to impress bulls and kept a lid on any attempted recovery.

The USD/JPY pair seesawed between tepid gains/minor losses through the Asian session and was last seen trading just above mid-104.00s, nearly unchanged for the day.

The pair lacked any firm directional bias on Wednesday and consolidated the previous session’s slump to monthly lows. A combination of diverging forces failed to provide any meaningful impetus and led to a subdued/range-bound price moves through the first half of the trading action.

The US dollar languished near two-week lows amid doubts over a relatively faster US economic recovery following the release of the US jobs report on Friday. This was seen as one of the key factors that kept a lid on any meaningful recovery for the USD/JPY pair, at least for now.

The negative factor, to a larger extent, was offset by the prevalent upbeat market mood. The risk-on flow undermined the safe-haven Japanese yen and extended some support to the USD/JPY pair. The global risk sentiment remained well supported by the progress in coronavirus vaccinations

This, along with prospects for a massive US fiscal spending plan, has been fueling hopes for a strong global economic recovery and continued boosting investors’ confidence. Meanwhile, the market remains divided about the impact of the proposed $1.9 trillion stimulus package on the USD.

From a technical perspective, the USD/JPY pair, for now, has managed to find some support near a multi-month-old descending trend-line resistance breakpoint. This makes it prudent to wait for some strong follow-through selling before positioning for any further depreciating move.

Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. The data might influence the USD price dynamics. Apart from this, the broader market risk sentiment should assist traders to grab some short-term opportunities.

Technical levels to watch