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  • A subdued USD demand failed to assist USD/JPY to gain any meaningful traction.
  • Improving global risk sentiment undermined the JPY and helped limit the downside.

The USD/JPY pair remained depressed through the early European session, albeit held above mid-107.00s, or near two-week lows set in the previous day.

The US dollar struggled to gain any meaningful traction despite a goodish pickup in the US Treasury bond yields and was seen as one of the key factors exerting some pressure for the fourth consecutive session on Tuesday.

However, a turnaround in the global risk sentiment, as depicted by strong gains in the US equity futures, undermined the Japanese yen’s safe-haven demand and helped limit any further downside, at least for the time being.

Tuesday’s better-than-expected Chinese trade balance figures for March helped offset some concerns over the economic fallout from the coronavirus pandemic and provided a modest lift to investors’ appetite for perceived riskier assets.

This comes amid some encouraging signs from the European hotspots, Spain and Italy, where the number of new cases and the death toll have been decreasing, albeit failed to impress bulls or assist the pair to gain any meaningful traction.

The pair’s inability to capitalize on a combination of factors suggests that the near-term bearish pressure might still be far from being over. Hence, some follow-through slide, back towards testing the 107.00 mark, remains a distinct possibility.

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