- USD/JPY came under some renewed selling pressure and eroded a major part of the overnight gains.
- A softer tone surrounding the USD was seen as a key factor exerting downward pressure on the pair.
- An uptick in the US bond yields, the underlying bullish sentiment helped limit losses for the major.
The USD/JPY pair edged lower through the Asian session and was last seen hovering near the lower end of its daily trading range, around the 103.75-70 region.
The pair witnessed some fresh selling on Wednesday and extended the previous session's intraday pullback from levels beyond the 104.00 round-figure mark. The downtick was sponsored by a softer tone surrounding the US dollar, though seems limited amid the underlying bullish sentiment in the global financial markets.
The greenback remained depressed as investors turned cautious ahead of President-elect Joe Biden's inaugural ceremony on Wednesday. That said, hopes for more aggressive US fiscal spending under Biden's presidency continued lending support to the US Treasury bond yields, which should help limit any meaningful USD downside.
The market bets for additional US stimulus measures increased further after the US Treasury Secretary nominee Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday. Yellen urged lawmakers to act big on COVID-19 relief package and not worry too much about debt, though did little to influence the market sentiment.
Apart from this, the optimism over the rollout of vaccines for the highly contagious coronavirus disease continued boosting investors' confidence. This, in turn, could weigh on the safe-haven Japanese yen and holds bearish traders from placing any aggressive bets around the USD/JPY pair amid absent relevant economic releases.
The market focus now shifts to the latest monetary policy update by the Bank of Japan, scheduled to be announced during the Asian session on Thursday. Some repositioning trade ahead of the key event risk might infuse some volatility around the USD/JPY pair and assist traders to grab some meaningful opportunities.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.