- USD/JPY witnessed a modest intraday pullback on Wednesday from three-week tops.
- A fresh leg down in the equity markets drove haven flows and benefitted the JPY.
- Renewed USD buying interest helped limit any deeper losses and bounce off lows.
The USD/JPY pair had some good two-way price moves during the Asian session on Wednesday and now seems to have stabilized in the neutral territory, just above mid-105.00s.
The pair gained some traction during the early part of the trading action on Wednesday and climbed to a two-week high level of 105.80. The uptick lacked any strong follow-through buying and also seemed rather unaffected by the first US presidential debate.
However, US President Donald Trump’s comments that the election result might not be known for months added to the already uncertain environment. This, in turn, triggered a fresh wave of the global risk aversion trade and underpinned the safe-haven Japanese yen.
The USD/JPY pair retreated around 35-40 pips, albeit the emergence of some fresh US dollar buying interest extended some support and helped limit the downside. The pair now seems to have stabilized near the 105.60 region and remains at the mercy of the market risk sentiment.
Later during the early North American session, market participants will look forward to the US macro data and speeches by influential FOMC members for some impetus. Wednesday’s US economic docket highlights the release of the final Q2 GDP print, Chicago PMI and Pending Home Sales data.
Technical levels to watch
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