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  • USD/JPY retreated around 120 pips from two-week tops and refreshed daily lows in the last hour.
  • The latest update shows Trump’s lead has narrowed in Michigan, while Biden is ahead in Wisconsin.
  • A modest uptick in the equity markets might undermine the safe-haven JPY and limit the downside.

The USD/JPY pair refreshed daily lows, around the 104.15 region, albeit lacked follow-through selling and quickly recovered few pips thereafter.

Following an early upsurge to two-week tops, around the 105.35 region, the met with some fresh supply and has now drifted into the negative territory for the second straight session. The latest leg of a sudden fall over the past hour or so could be attributed to the emergence of some fresh selling around the US dollar.

According to Reuters, citing Edison Research, the incumbent President Donald Trump’s lead narrowed in the key battleground state of Michigan and former Vice President Joe Biden is leading in another swing state – Wisconsin. With 97% of expected votes tallied so far, Biden has 49.5% votes as against Trump’s 48.8%.

The narrowing gap increased prospects for a victory for Joe Biden, which, in turn, was seen as a key factor weighing on the greenback. Meanwhile, a goodish uptick in the US equity futures undermined demand for the safe-haven Japanese yen and helped limit any further losses for the USD/JPY pair, at least for now.

Moreover, the fact that Trump will certainly challenge the outcome, might hold investors from placing any aggressive USD bearish bets. Even from a technical perspective, the USD/JPY pair has been showing some resilience near the 104.00 mark. This further warrants some caution before positioning for any further depreciating move.

Technical levels to watch