- USD/JPY trims gains on Thursday and pulls back to 105.00 area
- The Japanese yen picks up as market sentiment deteriorates.
- Lower US T-Bond yields are weighing on USD demand.
The US dollar is going through a bearish correction against the Japanese yen on Thursday after having rallied more than 2% earlier this week. Upside attempts have lost steam 105.65 and the pair is pulling back to levels right above 105.00.
The yen picks up as risk appetite fades
The safe-haven Japanese yen is trimming loses on Thursday with the enthusiasm about the progress of a COVID-19 vaccine ebbing. The market has turned its attention back to the surging coronavirus infections in the US and Europe, coming to terms with the fact that that the vaccine will not be ready soon enough to avert a very challenging winter.
Equity markets have been trading in the red, reflecting a more cautious sentiment, with the main Wall Street indexes posting declines between 0.7% and 1.2%. Likewise, US Treasury Bond yields are pulling down from multi-month highs with the 10-year Treasury note at 0.91% after having peaked at 0.97% earlier this week, which is weighing on the greenback.
USD/JPY is still targeting 106.00 – UOB
According to the FX Analysis Team at UOB, the pair remains biased higher and on track to test the 106.10 resistance level: “There is ‘room for the current strong advance in USD to test the major resistance at 106.10’. At this stage, the odds for a sustained rise above this level are not high. On the downside, a break of 104.40 (‘strong support’ level previously at 104.00) would indicate that USD is not ready for 106.10.”
Technical levels to watch
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