- USD/JPY edged higher on Thursday, albeit lacked any strong follow-through buying.
- The risk-off mood undermined the safe-haven JPY and kept a lid on the early uptick.
- A modest pickup in the USD demand extended support and helped limit the downside.
The USD/JPY pair refreshed daily lows during the early European session, albeit lacked any strong follow-through and was last seen trading with modest gains, just above mid-104.00s.
The pair failed to capitalize on its early uptick, instead met with some fresh supply at higher levels and retreated around 25-30 pips from the intraday high level of 104.75. Fading hopes about a pre-election US fiscal stimulus measures took its toll on the global risk sentiment. This, in turn, underpinned the safe-haven Japanese yen and capped any meaningful upside for the USD/JPY pair.
House of Representatives Speaker Nancy Pelosi will continue discussions with the US Treasury Secretary Steven Mnuchin and remained optimistic about reaching a deal, though acknowledged that the measures might now pass before November 3. Moreover, investors about the ability of the US Congress to overcome strong opposition from Senate Republicans over a bigger stimulus bill.
Adding to this, US President Donald Trump accused Democrats of being unwilling to craft an acceptable compromise on stimulus. This comes amid the US political uncertainty, which held bulls from placing any aggressive bets around the USD/JPY pair. However, a modest pickup in the US dollar demand extended some support and helped limit deeper losses, at least for the time being.
Nevertheless, the USD/JPY pair remains well within the striking distance of one-month lows, around the 104.35 region, touched on Wednesday. Market participants now look forward to the final presidential debate between the incumbent President Trump and Democratic candidate Joe Biden. In the meantime, the release of the US Initial Weekly Jobless Claims might produce some short-term opportunities.
Technical levels to watch
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