USD/JPY rallies over 40 pips from two-week lows, jumps to 104.85 area
- USD/JPY staged a goodish intraday bounce from two-week lows set earlier this Wednesday.
- The upbeat market mood undermined the safe-haven JPY and helped limit the early slide.
- An uptick in the US bond yields remained supportive, subdued USD demand capped gains.
The USD/JPY pair rallied over 40 pips and shot to fresh session tops in the last hour, albeit quickly retreated few pips thereafter. The pair was last seen trading near the 104.70 region, up around 0.15% for the day.
The pair witnessed a dramatic intraday turnaround following an early dip to the 104.40 region, or fresh two-week lows touched during the early European session and was supported by a combination of factors. The prevalent upbeat market mood undermined demand for the safe-haven Japanese yen and was seen as a key factor that helped limit the downside for the USD/JPY pair.
The optimistic over the rollout of vaccines for the highly contagious coronavirus diseases comes amid developments to fast-track the US President Joe Biden's $1.9 trillion COVID-19 stimulus package. This has been fueling hopes for strong global economic recovery and boosting investors' confidence, which, in turn, weighed on traditional safe-haven currencies, including the JPY.
Bullish trades further took cues from a modest pickup in the US Treasury bond yields, which remained well supported by expectations for a massive US fiscal spending. that said, a subdued US dollar price action failed to provide any additional boost and kept a lid on any runaway rally for the USD/JPY pair, warranting some caution before positioning for any further gains.
Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures later during the early North American session. Apart from this, the broader market risk sentiment and the US bond yields might further assist traders to grab some short-term opportunities.
Technical levels to watch