- USD/JPY gained traction for the fifth consecutive session on Wednesday.
- A modest USD pullback, the prevalent cautious mood capped the upside.
- The US macro data, Biden’s speech eyed for some trading opportunities.
The USD/JPY pair held on to its modest intraday gains through the mid-European session and was last seen trading around the 110.65 region, below the one-year tops set earlier this Wednesday.
The pair prolonged its recent strong upward trajectory and gained some follow-through traction for the fifth consecutive session. The momentum pushed the USD/JPY pair to the 111.00 neighbourhood, or the highest level since March 2020, though a combination of factors kept a lid on any further gains.
The prevalent cautious mood around the equity markets extended some support to the safe-haven Japanese yen. This, along with a modest US dollar pullback from four-month tops, held bullish traders from placing fresh bets and capped the upside for the USD/JPY pair, at least for the time being.
The yield on the benchmark 10-year US government bond struggled to capitalize on the overnight spike to levels beyond the 1.75% threshold, or 14-month tops. This, in turn, seemed to be the only factor that prompted some profit-taking around the greenback amid slightly overbought conditions.
That said, the prospects for a relatively faster US economic recovery from the pandemic helped limit the USD losses. Investors remained optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and US President Joe Biden's spending plan.
Market participants now look forward to the US economic docket, highlighting the releases of ADP report on private-sector employment, Chicago PMI and Pending Home Sales. This will be followed by Biden's speech at 20:20GMT, which might provide a fresh impetus to the USD/JPY pair.
Technical levels to watch
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