USD/JPY sticks to gains near multi-week high, eyeing a move beyond 116.00 amid risk-on

• USD/JPY scaled higher for the third straight day and climbed to a near one-month high on Wednesday.
• Dismal Japanese GDP report, risk-on impulse undermined the safe-haven JPY and extended support.
• Bulls further took cues from an uptick in the US bond yields and seemed unaffected by weaker USD.

The USD/JPY pair maintained its bid tone through the first half of the European session and was last seen trading around the 115.85 region, or a four-week high.

The pair prolonged its upward trajectory witnessed since the beginning of this week and gained follow-through traction for the third successive day on Wednesday. A downward revision of the domestic growth undermined the Japanese yen, which was further pressured by a strong recovery in the risk sentiment. This, in turn, was seen as a key factor that acted as a tailwind for the USD/JPY pair.

According to the revised data released earlier this Wednesday, Japan's economy expanded by 1.1% during the October-December period as against the preliminary reading of 1.3%. Adding to this, the yearly GDP growth rate stood at 4.6% as compared to the 5.4% rise estimated previously. The data raised concerns over a further downside risk amid the Ukraine crisis and persistent supply disruptions.

Bullish traders further took cues from a goodish rebound in the equity markets and an uptick in the US Treasury bond yields. The recent monster gains in commodity prices that followed Russia's invasion of Ukraine fueled worries about a major inflationary shock for the global economy and stagflation fears. This, in turn, acted as a tailwind for the US bond yields and should limit the USD losses.

The fundamental backdrop seems tilted in favour of bullish traders and a move beyond the 116.00 mark, towards testing the YTD high, around the 116.35 region touched in February. Wednesday's US economic docket highlights the release of JOLTS Job Openings later during the early North American session. The data might do little to influence the USD price dynamics or provide any impetus to the USD/JPY pair as the focus remains glued to fresh developments surrounding the Russia-Ukraine saga.

Technical levels to watch