• Upbeat market mood keeps investors away from safe-haven assets.
  • US Dollar Index fluctuates in a confined range above 99.
  • Wall Street opens the day sharply higher on Wednesday.

After closing the previous day a little below the 107 handle, the USD/JPY pair reversed its direction on Wednesday as the improving market sentiment made it tough for the safe-haven JPY to preserve its strength. As of writing, the pair was up 0.27% on a daily basis at 107.36.

Renewed trade optimism helps the pair push higher

Reports of China being open to making a partial trade deal with the United States (US) on Wednesday allowed risk-on flows to dominate the market action. Major European equity indexes rose sharply on these headlines and the 10-year US Treasury bond yield gained traction to confirm the upbeat market mood. Additionally, Wall Street's main indexes opened the day decisively higher.

Later in the session, markets will be paying close attention to Federal Open Market Committee (FOMC) Chairman Jerome Powell's remarks. On Tuesday, Powell said that there was no reason why the monetary expansion couldn't continue to weigh on the Greenback.

Moreover, the FOMC will publish the minutes of its September meeting later in the day. However, the fact that the FOMC meeting in September took place before the disappointing Manufacturing and Services Purchasing Managers' Index (PMI) data suggests that the statement is unlikely to adopt a dovish tone.

Technical levels to watch for