USD/JPY steadies below 105.50, looks to end week modestly lower

• USD/JPY recovered a majority of the daily losses it suffered earlier.
• US Dollar Index looks to close below 94.00.
• Wall Street’s main indexes continue to trade in the negative territory.

The USD/JPY pair came under pressure in the late Asian session on Friday and dropped to a 10-day low of 104.94. However, the pair staged a steady rebound in the remainder of the day and erase the majority of its daily losses. As of writing, USD/JPY was down 0.12% on the day at 105.37.

After US President Donald Trump announced that he tested positive for coronavirus, safe-haven flows took control of financial markets and helped the JPY gather strength against its rivals.

USD ignores mixed US jobs report

The USD also took advantage of the risk-averse market environment and the US Dollar Index (DXY) climbed to 94.00 area to limit USD/JPY’s losses. Nevertheless, the DXY struggled to preserve its momentum and is currently clinging to small daily gains at 93.80.

In the second half of the day, the data published by the US Bureau of Labor Statistics revealed that Nonfarm Payrolls in the US rose by 661,000 and missed the market expectation of 850,000. Further details of the report showed that the Unemployment Rate fell to 7.9% from 8.4% in August, which was likely caused by a 0.3% drop in the Labor Force Participation Rate.

Meanwhile, Wall Street’s main indexes opened the day sharply lower on Friday. After losing more than 1% in the early trade, however, the S&P 500 Index (SPX) reversed its direction and made it difficult for the JPY to continue to gather strength. At the moment, the SPX is losing 0.5%.

Technical levels to watch for