USD/JPY refreshes weekly tops, 106.00 mark back in sight
|- USD/JPY gained strong positive traction for the second consecutive session on Wednesday.
- A rebound in the equity markets undermined the safe-haven JPY and remained supportive.
- Bulls also took cues from a pickup in the US bond yields, though weaker USD capped gains.
The USD/JPY pair added to its strong intraday gains and refreshed weekly tops, around the 105.85 region during the mid-European session.
The pair built on the previous day's goodish rebound from levels below the key 105.00 psychological mark and gain some follow-through traction for the second consecutive session on Wednesday. The early move up was led by some cross-driven strength stemming from a strong rally in the GBP/JPY cross.
The uptick got an additional boost from a turnaround in the equity markets, which tends to undermine the safe-haven Japanese yen. The global risk sentiment remained well supported by the progress in COVID-19 vaccinations and US President Joe Biden's proposed $1.9 trillion stimulus package.
Meanwhile, the US bond market continued reacting to the prospects for a massive US fiscal spending plan. This was evident from a fresh leg up in the US Treasury bond yields, which further inspired bullish traders and remained supportive of the strong intraday positive move for the USD/JPY pair.
The US dollar, however, failed to benefit from an uptick in the US bond yields. This seemed to be the only factor that might hold investors from placing aggressive bullish bets and keep a lid on any runaway rally for the USD/JPY pair amid absent relevant market-moving economic releases from the US.
Market participants now look forward to Powell's second day of testimony before the House Financial Services Committee, which might influence the US bond yields and the USD. This, along with the broader market risk sentiment, might produce some short-term trading opportunities around the USD/JPY pair.
Technical levels to watch
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