“¢ Reviving safe-haven demand underpins JPY and prompts some fresh selling.
“¢ A goodish pickup in the USD demand does little to lend any support.
“¢ Investors eye Tuesday’s vote for some impetus ahead of FOMC on Thursday.
The USD/JPY quickly reversed around 30-35 pips from near one-month tops, albeit has managed to hold its neck just above the 113.00 handle.
The pair sudden reversal since the early European session seemed rather unaffected by a goodish pickup in the US Dollar demand and could be solely attributed to reviving safe-haven demand.
Investors seemed to have turned cautious ahead of the US midterm elections, which was eventually seen underpinning the Japanese Yen’s safe-haven status and exerting some fresh downward pressure.
The cautious mood was evident from a mildly softer tone around European equity markets, with bears taking additional cues from a modest retracement in the US Treasury bond yields.
According to the recent polls, Democrats are expected to win control of the House of Representatives in Tuesday’s vote, while the Republicans will keep their thin majority in the Senate.
However, a Republican victory in both chambers might turn out to be a bullish catalyst for the greenback and assist the pair to build on its recent strong rebound from six-week lows, touched on Oct. 26.
Apart from the USD price dynamics, broader market risk sentiment might play an important role in influencing the pair’s momentum ahead of the latest FOMC monetary policy update on Thursday.
Technical levels to watch
A follow-through weakness back below the 113.00 handle is likely to accelerate the fall towards 112.70-65 horizontal support before the pair eventually drops to test the 112.40 region. On the flip side, the 113.40-50 region might continue to act as an immediate hurdle, above which the pair seems all set to aim towards reclaiming the 114.00 round figure mark.
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