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  • USD/JPY staged a goodish rebound from multi-week lows amid the risk-on mood.
  • The attempted recovery move seemed unaffected by a subdued USD price action.
  • A US-China spat over the origin of the virus might contribute towards capping gains.

The USD/JPY pair built on its steady intraday recovery from multi-week lows and climbed to fresh session tops, around the 106.40 region in the last hour.

The USD/JPY pair showed some resilience below the 106.00 round-figure mark and stage a goodish intraday bounce on Thursday, snapping four consecutive days of losing streak. The prevalent upbeat market mood undermined the Japanese yen’s safe-haven demand and was seen as one of the key factors driving the pair higher.

The global risk sentiment got a modest lift following the release of Chinese trade balance data, which fueled speculations that the world’s second-largest economy could recover from the coronavirus-induced lockdowns quicker than anticipated. This added to the latest optimism over the re-opening of economies in some parts of the world.

Meanwhile, the intraday uptick seemed rather unaffected by a subdued US dollar price action. The greenback struggled to capitalize on this week’s gains and was seen consolidating in a range through the early European session amid a fresh leg down in the US Treasury bond yields. T

This coupled with worsening US-China relations over the origin of the coronavirus might keep a lid on any additional gains for the USD/JPY pair, at least for now. It is worth recalling that the US President Donald Trump has threatened to impose fresh tariffs on Chinese goods in retaliation to its mishandling of the virus outbreak at the early stage.

Hence, it will be prudent to wait for some follow-through strength before confirming that the attempted recovery is backed by any genuine buying or is solely led by some near-term short-covering move, which runs the risk of fizzling out rather quickly.

Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data might influence the USD price dynamics and produce some short-term trading opportunities later during the early North-American session.

Technical levels to watch