USD/JPY clings to modest gains above 106.00 on strong Wall Street rebound
- USD/JPY is trading in the positive territory above 106.00 in American session.
- Wall Street's main indexes are posting strong gains on Wednesday.
- US Dollar Index looks to snap six-day winning streak.
Despite the broad-based USD weakness on Wednesday, the USD/JPY pair gained traction and erased a large portion of the losses it suffered on Tuesday. As of writing, the pair was up 0.17% on a daily basis at 106.19.
Risk flows hurt JPY on Wednesday
The upbeat market mood on Wednesday seems to be making it difficult for the JPY to find demand.
After falling sharply in the previous three trading days and losing nearly 7% during that period, the S&P 500 Index opened more than 1% higher on Wednesday and was last seen rising 1.85% on the day at 3,393. Confirming the risk-on environment, the 10-year US Treasury bond yield is up 2.2%
On the other hand, the US Dollar Index, which touched its highest level since August 12th at 93.66 on Wednesday, reversed its direction and remains on track to snap its six-day winning streak. In the absence of significant macroeconomic data releases, the positive shift in market sentiment seems to be weighing on the USD as well.
In the early trading hours of the Asian session on Thursday, Machinery Orders will be featured in the Japanese economic docket.
Technical levels to watch for