Gaining Much More in Limited Time

The USD/JPY trading pair sustained its average intraday gaining throughout the initial half of the European trading session, and it successfully traded near the daily height of the 115.60 zones.

USD/JPY price chart. Source TradingView

There was a streak of traders buying the dip around the 115.25 zones early on Tuesday, and it later became positive for the second straight day as bullish traders looked to build on the overnight rebound from the 115.00 benchmarks. The intraday gains were aided by a positive twist in the worldwide risk sentiment that tended to limit the Japanese currency.

There was some ease in the Russia-Ukraine standoff as Russia announced the end of many of its military drills, which took place at the border with Ukraine, and further announced the return of its military personnel back to their bases in Russia. This went a long way in calming nerves over the imminence of a Russian attack on Ukraine while it sparked a quick recovery in stock markets, which resonated on safe-haven assets and commodities.

Bulls went ahead to take a cue from the new stat increase in the American Treasury bond yields, although the average US dollar weakness has put a cap on any more gains for the pair of the USD/JPY. The possibility of more rapid policy tightening by the Federal Reserve and the risk-on flow has moved the yields on the ten-year government bond above the 2.0% point.

More Hope in the Central Bank than Ever

The money markets appear to be convinced that the American central bank will take on a more stringent policy position to fight the incredibly high inflation rates, and the markets have been speculating a 50 basis points increase in interest rates by March. In return, this will aid the prospects for buying US dollars at some low levels, a further short-term appreciation movement for the USD /JPY pair.

Market players now anticipate the publication of the American Producer Price Index (PPI) scheduled for some time in the course of the North American trading session. The Producer Price Index, along with the Treasury bond yields, is expected to have an influence on the US dollar price changes.

The USD/JPY traders are also expected to further take a cue from the general market risk sentiments to latch on to some near-term opportunities surrounding the USD/JPY trading pair.