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  • USD/JPY attempts a tepid from near 104.10 levels.
  • Bears still eye a test of September lows of 104.00.
  • The spot remains at the mercy of risk trends, USD dynamics.

USD/JPY remains under heavy selling pressure ahead of the European open, as the bears eye a break below the September low of 104.00 amid persistent risk-off mood.

Thursday’s sharp rebound from five-week lows of 104.03 to 104.72 is almost nearing its end, as the sellers have returned with pomp and show this Friday.

The spot faces a triple whammy from COVID-19 resurgence-led risk aversion on one hand while easing travel restrictions in Japan and broad-based US dollar retreat also add to the weight on the major.

The safe-haven Japanese yen remains strongly bid, as surging coronavirus cases in the US and Europe dampen the market sentiment and drag the Asian stocks lower. The Nikkei 22 index closed 1.52% lower on the day while the S&P 500 futures slump over 2%.

Further, the Japanese government lowering infection risk advisory for China, Australia and others to level 2 from level 3 also helped the yen recover lost ground.

Meanwhile, the US dollar pullback from monthly highs against its main competitors, in the face of falling Treasury yields, exacerbated the pain in USD/JPY.

Looking ahead, it remains to be seen if the bulls manage to defend the 104 mark, as the US dollar could resurge if the risk-aversion deepens in European trading.

The solid US Q3 GDP-led recovery could be revived on fresh haven demand for the buck ahead of the US macro news and election next week.

USD/JPY technical levels

The bears now eye the September low of 104.00, below which strong support awaits at 103.75 (daily classic S2). Alternatively, Thursday high of 104.72 could be tested if the bulls take on control, with eyes on the 105.00.

USD/JPY additional levels