USD/JPY trades with modest gains around mid-104.00s, lacks follow-through

The USD/JPY pair traded with a mild positive bias through the early European session, albeit lacked any strong follow-through buying. The pair was last seen trading around mid-104.00s, up around 0.11% for the day.

Following the previous day's good two-way price swings, the pair managed to regain some positive traction on Wednesday and was being supported by the prevalent upbeat market mood. The global risk sentiment remained well supported by the latest optimism over a potential early rollout of vaccine for the highly contagious coronavirus disease.

Adding to this, the smooth beginning of President-elect Joe Biden's transition to the White House and reports that the former Fed Chair Janet Yellen could become the next US Treasury Secretary further boosted investor's confidence. That said, a softer tone surrounding the US dollar kept a lid on any meaningful upside for the USD/JPY pair.

The market focus now shifts to a flurry of top-tier US macro data for some short-term trading opportunities. Wednesday's US economic docket highlights the releases of the preliminary (second estimate) GDP report, Durable Goods Orders, Initial Weekly Jobless Claims and final Michigan Consumer Sentiment Index for November.

Later during the US session, the latest FOMC meeting minutes will be scrutinized for the possibility of any further policy easing by the Fed in December. The Fed's policy outlook will play a key role in influencing the near-term USD price dynamics and assist investors to determine the next leg of a directional move for the USD/JPY pair.

Technical levels to watch