Home USD/JPY remains depressed near 105.00 mark, lacks follow-through selling
FXStreet News

USD/JPY remains depressed near 105.00 mark, lacks follow-through selling

  • USD/JPY failed to capitalize on the overnight strong gains and witnessed some selling on Tuesday.
  • Scepticism over the efficacy of COVID-19 vaccine benefitted the safe-haven JPY and exerted pressure.
  • The lack of any strong follow-through selling warrants some caution for aggressive bearish traders.

The USD/JPY pair remained depressed through the early European session and was last seen trading around the key 105.00 psychological mark, around 20 pips off daily lows.

The pair came under some renewed selling pressure on Tuesday and eroded a part of the previous session’s strong bounce of nearly 250 pips from multi-month lows. It is worth recalling that the USD/JPY pair witnessed some aggressive short-covering move on the first day of a new trading week in reaction to a promising development in late-stage COVID-19 vaccine trials.

Pfizer announced that its experimental vaccine – co-developed with BioNTech – was more than 90% effective in preventing COVID-19. However, the optimism faded rather quickly amid questions about the efficacy and the length of immunity provided by the vaccine. This, in turn, drove investors back towards the safe-haven Japanese yen and exerted some pressure on the USD/JPY pair.

The nervousness was further evident from a fresh leg down in the US Treasury bond yields, which kept the US dollar bulls on the defensive and contributed to the offered tone surrounding the USD/JPY pair. Meanwhile, the downside remains limited, at least for the time being, amid a mildly positive tone around the US equity futures, warranting some caution for aggressive bearish traders.

There isn’t any major market-moving economic data due for release from the US on Tuesday. Hence, the broader market risk sentiment, along with the USD price dynamics will play a key role in influencing the USD/JPY pair and produce some short-term trading opportunities.

Technical levels to watch

 

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.