USD/JPY looks to end day with modest gains near 110

• Wall Street's main indexes hit new all-time highs.
• US Dollar Index stretches higher toward 99 on Wednesday.
• 10-year US Treasury bond yield adds more than 1%.

The USD/JPY pair spent the Asian session in a tight range below the 110 handle but gained traction during the European morning and touched its highest level in more three weeks at 110.14. Although the pair lost its momentum after the initial upsurge, it remains on track to close the day modestly higher near 110.

Risk rally continues

The positive market sentiment on Wednesday seems to be weighing on the demand for traditional safe-havens such as the JPY. The official data from China showed that, as of Wednesday morning, the growth rate of new coronavirus infections fell to the lowest level since late January. Moreover, China's National Health Commission (NHC) announced that the recovery rate from infections rose to 10.6% from 1.3% on January 27th. 

Major European equity indexes closed the day decisively higher and Wall Street's main indexes hit fresh all-time highs to reflect the strong risk appetite. Additionally, the 10-year US Treasury bond yield, which closed the previous day 1.4% higher, extended its recovery and was last up 1.8% on the day at 1.626%.

In the meantime, the poor performance of major European currencies during the American session provided a boost to the greenback and helped the pair stay in the positive territory. The US Dollar Index was last seen testing the 99 handle, adding 0.22%.

Producer Price Index (PPI) will be the only data featured in the Japanese economic docket on Thursday.

Technical levels to watch for