Throughout the Asian session, the USD/JPY pair gained ground, eventually reaching a one-week high in the vicinity of 113.70 in the final hour of trading.
On Tuesday, the pair built on the previous day’s gains and acquired some follow-through momentum for the second day in a row, continuing its upward trend.
The relatively secure Japanese Yen suffered as a result of the generally positive market sentiment, which was viewed as a crucial cause in the minor rise in the value of the US Dollar against the Japanese yen.
The worldwide risk attitude has steadied as a result of reports that Omicron patients have only experienced minor side effects.
These measures helped to alleviate anxieties over the economic consequences of the novel variant of the coronavirus and to enhance investor confidence, as seen by an upbeat mood in the stock market.
Another source of inspiration for bullish traders was an increase in the yields on US Treasury bonds. However, the weakening of the Dollar against the Japanese Yen could prevent the pair from making any additional gains.
The underlying environment, on the other hand, is favorable to bulls and supports the probability of a further appreciating advance in the short term.
Investors appear to believe that the Federal Reserve will be obliged to undertake a more aggressive policy stance to keep inflation from rising too quickly.
The markets have begun to factor in the potential for a rate increase by May 2022, which should continue operating as a positive force for the Dollar in the near term.
There is no key market-moving economic data due out from the United States today, so the USD/JPY pair will be at the hands of the wider market’s risk sentiment.
Aside from that, the yields on US Treasury bonds will have an impact on the market dynamics of the USD and create some significant trading possibilities around the major.
Keep An Eye On The Technical Levels.
USD/JPY CHART source: Tradingview.com
With the start of the European session approaching, the USD/JPY pair maintained its bullish stance and was last seen lingering towards the upper end of its daily trading band, around the 113.00 mark.
Even from a technical standpoint, bulls have shown some resiliency in the lead-up to the mid-112.00s, which should now serve as a firm support level for the USD/JPY pair.
Having said that, it will still be smart to wait for a significant increase of follow-through purchasing before preparing for a further upward movement.
There is no big market-moving economic data anticipated to be released from the United States on Tuesday, which should serve as an additional cautionary note for overzealous bullish traders.