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USD/JPY clings to gains, bulls eyeing a sustained move beyond 110.00 mark

  • USD/JPY regains some positive traction amid improving risk sentiment.
  • The prevalent bullish tone surrounding the USD remained supportive.

The USD/JPY pair managed to catch some fresh bids on Wednesday, albeit seemed struggling to extend the momentum further beyond the key 110.00 psychological mark.

As investors assessed the risk of the outbreak of a new coronavirus in China, improving global risk sentiment undermined demand for traditional safe-haven assets – including the Japanese yen – and helped the pair to regain some positive traction on Tuesday.

USD/JPY supported by fading safe-haven demand/stronger USD

The risk-on flow was evident from a positive mood around equity markets. The same was further reinforced by a goodish pickup in the US Treasury bond yields, which provided a goodish lift to the US dollar and remained supportive of the bid tone surrounding the major.

Despite the positive factors, the intraday uptick lacked any strong bullish conviction amid absent relevant fundamental catalyst. Hence, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move.

In absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum and produce some short-term trading opportunities on Wednesday.

Technical levels to watch

 

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