- USD/JPY continues gaining traction and recovers further from seven-week lows set on Tuesday.
- The positive move was exclusively sponsored by a goodish pickup in demand for the greenback.
- The downbeat mood did little to benefit the safe-haven JPY or hinder the pair’s intraday uptick.
The intraday USD buying picked up pace in the last hour and lifted the USD/JPY pair to fresh session tops, around the 106.80 region.
Following the slump witnessed over the past two trading session, the US dollar was back in demand on Wednesday and assisted the pair to build on the previous day's late rebound from the vicinity of the 106.00 mark, or seven-week lows.
Bullish traders further took cues from a modest pickup in the US Treasury bond yields and largely shrugged off the prevalent downbeat mood around the equity markets, which tends to underpin demand for the safe-haven Japanese yen.
The ever-increasing number of new coronavirus cases globally overshadowed the overnight optimism over a sharp V-shaped global economic recovery. The market worries were further fueled by the latest forecasts from the International Monetary Fund.
In its updated World Economic Outlook forecast released this Wednesday, the IMF noted that the coronavirus outbreak hit the global consumption deeper than expected and now expects the global output to contract by 4.9% in 2020 (-3% in April forecast).
This, in turn, took its toll on the global risk sentiment, albeit did little to benefit the safe-haven JPY or hinder the USD/JPY pair's intraday positive move. The pair has now recovered a major part of the previous day's negative move.
However, the upside is likely to remain limited as investors might refrain from placing any aggressive bullish bets, rather wait for a fresh catalyst. Hence, it will be prudent to wait for a sustained move beyond the 107.00 mark before positioning for any further gains.
Technical levels to watch
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