USD/JPY extends recovery, closes in on 111.50
- Wall Street's main indexes register strong gains on Tuesday.
- US Dollar Index rebounds to 102 area during American session.
- US is reportedly very close to finalizing the coronavirus stimulus bill.
The USD/JPY pair gained traction during the American trading hours as the upbeat market mood made it difficult for the JPY to find demand as a safe-haven. As of writing, the pair was trading at 111.40, adding 0.17% on a daily basis.
US stimulus hopes lift market sentiment
Heightened hopes of US lawmakers finally approving the coronavirus economic relief bill on Tuesday provided a boost to major equity indexes in the US. As of writing, the Dow Jones Industrial Average and the S&P 500 were up 7.25% and 6.5%, respectively.
"I believe we're on the five-yard line. It has taken a lot of noise and a lot of rhetoric to get us here," Senate Majority Leader Mitch McConnell said on Tuesday. "Despite all of that, we are very close."
On the other hand, the US Dollar Index (DXY), which dropped all the way to 101.05 earlier in the day, erased a large portion of its daily losses on the back of rising US Treasury bond yields and helped the pair push higher. At the moment, the DXY is still down 0.5% on the day at 102.
The data published by the IHS Markit showed that the economic activity in the US manufacturing sector is expected to contract at a softer pace than anticipated in March.
US: Markit Manufacturing PMI drops to 49.2 in March (preliminary) vs. 42.8 expected.
Technical levels to watch for