USD/JPY prints fresh daily highs above 104.00, rebonds  from one-month lows

• Japanese yen is among the worst performers, fails to benefit from a reversal in Wall Street.
• USD/JPY erases losses and continues in familiar range.

The USD/JPY rose more than 50 pips from the lows and printed a fresh daily high at 104.10. It is trading at 104.05, marginally higher for the day, significantly above the bottom it reached at 103.49, the lowest level since November 9.

A recovery of the US Dollar across the board triggered the rebound in USD/JPY. The DXY rose from the lowest level since 2018 at 90.31 to 90.75. It is still in negative compared to Friday’s close but off lows.

The yen weakened during the American session even as equity prices in Wall Street pulled back from daily highs. The Dow Jones is up by 60 points or 0.20%, and the Nasdaq gains 1.15%, both off highs.

Optimism around US traders probably softened amid new lockdowns in London and new measures in New York to curb the increase in coronavirus cases. The first started in the US on Monday in Long Island.

From a technical perspective, the rebound in USD/JPY from a key level back to the trading range that is in place since mid-November between 103.70 and 104.60. The pair continues to be biased to the downside; however, the yen needs to break and holds below 103.70 to point to a test of the recent lows at 103.16.  

Technical levels to watch