- USD/JPY remained confined in a narrow trading band through the early European session.
- The prevalent offered tone surrounding the USD kept a lid on any attempted positive move.
- The upbeat market mood undermined the safe-haven JPY and helped limit deeper losses.
The USD/JPY pair lacked any firm direction and seesawed between tepid gains/minor losses, below mid-107.00s through the early European session.
A combination of diverging forces failed to provide any meaningful impetus to the major and led to a subdued/range-bound price action on Tuesday. This comes on the back of the previous day’s intraday pullback of around 30 pips from near two-week tops and suggests investors’ reluctance to place any aggressive directional bet.
The ever-increasing number of coronavirus cases in the US dampened prospects for a swift recovery for the domestic economy and kept exerting some pressure on the USD. The greenback was also pressured by a weaker tone surrounding the US Treasury bond yields, which contributed towards capping any meaningful upside for the USD/JPY pair.
Meanwhile, the downside remained cushioned and the USD/JPY pair, so far, has managed to hold above the 107.00 mark. The latest optimism over a potential vaccine for the highly contagious disease remained supportive of the upbeat market mood, which undermined the safe-haven Japanese yen and seemed to extend some support to the pair.
In the absence of any major market-moving economic releases, the broader risk sentiment will continue to influence the JPY’s safe-haven demand. This along with the USD price dynamics might produce some short-term trading opportunities.
Technical levels to watch
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