- USD/JPY stalled its recent sharp retracement slide from the 107.00 mark.
- Receding safe-haven demand undermined the JPY and remained supportive.
- Sliding US bond yields, weaker USD capped gains ahead of FOMC minutes.
The USD/JPY pair struggled to capitalize on its intraday bounce from monthly lows and was last seen trading in the neutral zone, around the 105.40 region.
The pair managed to find some support just ahead of the key 105.00 psychological mark and for now, seems to have stalled its recent rejection slide from the 107.00 area. The uptick was supported by a rally in the equity markets, which tends to dent the Japanese yen’s perceived safe-haven status.
The pair recovered over 50 pips from the lowest level since July 31, albeit lacked any strong follow-through. The US dollar remained on the defensive amid the uncertainty over the next round of the US fiscal stimulus measures, which kept a lid on the USD/JPY pair’s attempted recovery move.
Apart from this, the ever-increasing number of coronavirus cases fueled concerns about the US economic recovery and further undermined the already weaker sentiment surrounding the greenback. Bearish traders further took cues from a fresh leg down in the US Treasury bond yields.
Meanwhile, investors now seemed reluctant to place fresh bets, rather preferred to move on the sidelines ahead of Wednesday’s release of the latest FOMC meeting minutes. This, in turn, further contributed to the pair’s range-bound price action through the early European session.
The FOMC minutes will be closely scrutinized for hints about the US central bank’s next move. The Fed’s policy outlook will play a key role in influence the near-term USD price dynamics and assist traders to determine the next leg of a directional move for the USD/JPY pair.
Technical levels to watch
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