- USD/JPY remains depressed for the second consecutive session on Friday.
- The offered tone surrounding the USD was seen exerting some pressure.
- The upbeat market mood might help limit deeper losses, at least for now.
The USD/JPY pair edged lower through the early European session and was last seen hovering near daily lows, just above mid-105.00s.
The pair extended the previous day’s retracement slide from three-day tops, around the 106.20 region, and remained depressed for the second consecutive session on Friday. The emergence of some fresh selling around the US dollar was seen as one of the key factors exerting pressure on the USD/JPY pair.
The USD failed to capitalize on the FOMC minutes-led rebound, instead met with some fresh supply on Thursday following the release of the US Weekly Jobless Claims. In fact, the number of Americans filing for unemployment benefits jumped back above the 1 million mark during the week ended August 14.
The disappointing labour market report comes on the back of the Fed’s warning that a recovery in hiring is starting to slow, which added to growing market worries over the US economic recovery. Apart from this, the uncertainty over the US fiscal stimulus measures continued weighing on the greenback.
Meanwhile, a modest pickup in the US Treasury bond yields failed to impress the USD bulls, albeit could extend some support to the USD/JPY pair. This, coupled with the upbeat market mood might further undermine the safe-haven Japanese yen and further contribute to limit any deeper losses for the major.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that this week’s rebound from monthly lows was a dead-cat bounce and positioning for the resumption of the two-week-old bearish trend.
Technical levels to watch
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