- Not so dovish comments by Fed officials prompt some USD short-covering.
- Bulls shrug off cautions mood, rather take cues from positive US bond yields.
- Traders now eye Wednesday’s US durable goods orders data for fresh impetus.
The USD/JPY pair gained some positive traction on Wednesday and built on the overnight late rebound from sub-107.00 level - the lowest level since early-January swing lows.
After a rather muted reaction to the disappointing release of the US economic data - new home sales figures and consumer confidence index, the pair managed to attract some buying in reaction to not so dovish comments by St Louis Fed President James Bullard.
The most dovish Fed official dismissed a 50bps rate cut, while the Fed Chair Jerome Powell said that it is important not to overreact to any individual data point. The remarks prompted some US Dollar short-covering move and helped the pair to stage a modest recovery from oversold conditions.
The momentum extended through the Asian session on Wednesday and seemed largely unaffected by a weaker trading sentiment around equity markets, which tends to underpin the Japanese Yen's safe-haven demand, rather took cues from a modest uptick in the US Treasury bond yields.
Despite the supporting factors, the pair seemed to lack any strong follow-through beyond mid-107.00s or weekly tops. Market participants now look forward to the release of US monthly durable goods orders data, due later during the early North-American session, for some meaningful impetus.
In the meantime, the USD price dynamics and the broader market risk sentiment seem more likely to play an important role in influencing the pair's momentum and producing some short-term trading opportunities.
Technical levels to watch
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