- USD/JPY edged lower on Tuesday amid reviving demand for the safe-haven JPY.
- Fears about the second wave of virus infections weighed on the market sentiment.
- Sliding US bond yields undermined the USD and added to the pair’s weaker tone.
The USD/JPY pair traded with a mild negative bias on Tuesday, albeit lacked any strong follow-through selling and was last seen trading near mid-107.00s.
The pair edged lower during the Asian session on Tuesday and eroded a part of the previous day’s strong intraday positive move to near three-week tops amid reviving demand for the safe-haven Japanese yen.
Despite the optimism over easing lockdown restrictions globally, investors now seemed concerned about the second wave of coronavirus infections and the same was evident from a weaker tone around the equity markets.
The risk-off mood was further inforced by a fresh leg down in the US equity markets, which coupled with speculations that the Fed might be forced to push rates below zero and kept a lid on the recent US dollar rally.
A subdued USD demand further contributed to the weaker tone surrounding the USD/JPY pair, albeit the pullback remained limited as investors preferred to wait for a catalyst before placing fresh directional bets.
Hence, it will be prudent to wait for some follow-through selling before confirming that the pair’s corrective bounce from multi-week lows might have already run out of steam and positioning for any further slide.
Moving ahead, market participants now look forward to the release of the US consumer inflation figures, which coupled with scheduled speeches by FOMC members might influence the USD price dynamics and provide some impetus.
Technical levels to watch
Share
