USD/JPY refreshes session tops, around 104.85 amid notable USD demand

• A strong pickup in the USD demand assisted USD/JPY to rebound swiftly from the 104.00 mark.
• A selloff in the equity markets benefitted the JPY’s safe-haven status and capped the upside.

The USD/JPY pair spiked to fresh daily tops, around the 104.80-85 region in the last hour, albeit lacked any strong follow-through and quickly retreated few pips thereafter.

The pair stalled its recent bearish trajectory and managed to find decent support near the 104.00 round figure mark amid oversold conditions on short-term charts. The strong recovery from the lowest level since March 8th was exclusively sponsored by a strong pickup in the US dollar demand.

Concerns that the second wave of coronavirus infections could halt the current economic recovery provided a strong boost to the greenback’s status as the global reserve currency. This, in turn, was seen as a key factor that prompted some aggressive short-covering move around the USD/JPY pair.

The USD buying interest picked up pace during the early North American session and pushed the pair to an intraday high level of 104.84. However, a selloff in the equity markets extended some support to the Japanese yen’s safe-haven status and kept a lid on any further gains for the USD/JPY pair.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out in the near-term and positioning for any further near-term appreciating move. Market participants now look forward to the Fed Chair Jerome Powell’s speech for a fresh impetus.

Technical levels to watch