The USD/JPY price has built steady intraday gains and is back at the psychological level of 115.00 ahead of the European session.
Following the restrained price movement of the previous day, USD/JPY picked up new purchases on Wednesday and recently traded just a few pips below its month-high. On the other hand, the rally lacked bullish confidence and is likely to remain contained due to a weaker level of risk benefiting the safe Japanese yen.
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Despite recent reports that the Omicron variant may not be as severe as previously thought, uncertainty regarding the economic impact of the COVID-19 spike has offset recent optimism. In addition, the USD/JPY pair could face obstacles due to the generally weaker sentiment in equity markets.
Meanwhile, flight to safety caused US Treasury bond yields to fall slightly, putting the US dollar bulls on the defensive early Wednesday. This may discourage traders from placing aggressive directional bets and hinder any significant upside potential for the USD/JPY pair.
On a technical level, traders may also wait for continued strength beyond the resistance of the upward channel before initiating another positive move. It coincides with the previously mentioned barrier at 115.00, which should serve as a major turning point for the USD/JPY pair in the near term.
There is now much anticipation for data release on the trade balance, wholesale inventory, and pending home sales. The US dollar will be impacted by this and US bond yields. In addition, the broader market risk sentiment could boost the USD/JPY pair.
USD/JPY Price Technical Analysis: Bulls Pausing Amid Low Activity
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The USD/JPY price is consolidating in a tight range under 115.00. However, the price is above the key moving averages on the 4-hour chart. On the other hand, the volume stays below the average, indicating that the trend bias is unclear. Hence, it is wise to wait for the price to break out to trigger a trend move.
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