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  • USD/JPY lost its traction and fell toward 105.00 on Wednesday.
  • Safe-haven flows help JPY gather strength against its rivals. 
  • US Dollar Index remains on track to close in red.

The USD/JPY pair stayed relatively quiet near 105.50 during the first half of the day but came under renewed bearish pressure during the American session as the souring market mood helped JPY find demand as a safe-haven. As of writing, the pair is down 0.35% on the day at 105.10 and is looking to post its lowest daily close since September 22nd.

Wall Street turns south on Wednesday

In the absence of significant macroeconomic data releases and fundamental drivers, USD/JPY stayed in a confined range. However, the negative shift in market sentiment following US Treasury Secretary Mnuchin’s pessimistic comments about the possibility of reaching a deal on coronavirus relief bill ahead of the election weighed on the pair.

Reflecting the risk-off market mood, major equity indexes in the US are down between 0.58% and 1.1% on a daily basis. Additionally, the 10-year US Treasury bond yield if falling for the fifth straight trading day.

In the meantime, the US Dollar Index, which dropped to a daily low of 93.25, recovered modestly toward 93.40 area and helped USD/JPY find support.

On Thursday, the US economic docket will feature the weekly Initial Jobless Claims, Philadelphia Fed Manufacturing Survey and NY Empire State Manufacturing Index data. Investors will continue to keep a close eye on political developments in the US.

Technical levels to consider