- USD/JPY witnessed a modest pullback on Tuesday from the 105.75-80 supply zone.
- The prevalent cautious mood benefitted the safe-haven JPY and exerted pressure.
- A subdued USD demand did little to provide any impetus ahead of Powell’s speech.
The USD/JPY pair refreshed daily lows, around mid-105.00s during the first half of the European trading action and eroded a part of the previous day’s strong positive move.
The pair continued with its struggle to make it through the 105.80 supply zone and witnessed a modest pullback on Tuesday. A cautious mood around the equity markets underpinned the Japanese yen’s safe-haven demand and was seen as a key factor exerting some pressure on the USD/JPY pair.
The US political uncertainty ahead of the presidential election on November 3 overshadowed the overnight positive news about the US President Donald Trump’s return to the White House. Even hopes of a compromise over a new coronavirus relief package failed to boost investors’ sentiment.
Bearish traders further took cues from a turnaround in the US Treasury bond yields. Adding to this, a softer tone surrounding the US dollar exerted some additional pressure on the USD/JPY pair and contributed to the intraday pullback of around 25 pips from the daily swing highs.
Moving ahead, market participants now look forward to the Fed Chair Jerome Powell’s scheduled speech for some impetus. This, along with the broader market risk sentiment, will influence the USD/JPY price dynamics and produce some trading opportunities amid absence relevant macro data.
Technical levels to watch
Any subsequent slide is likely to find decent support near the 105.25 region, below which the USD/JPY pair is likely to slide back to challenge the key 105.00 psychological mark. On the flip side, the 105.75-80 supply zone might continue to cap the upside. A convincing breakthrough now seems to lift the pair beyond the 106.00 mark, towards testing the next major hurdle near the 160.25-30 region.
Share
