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  • USD/JPY extended its subdued price action on Tuesday, well within a familiar trading range.
  • Improving risk sentiment weighed on the JPY’s safe-haven status and remained supportive.
  • Escalating US-China tensions might turn out to be a key factor capping gains for the major.

The USD/JPY pair has managed to rebound around 25 pips from the Asian session lows and is currently placed near the top end of its daily trading range, around the 106.75 region.

The pair continued with its subdued/range-bound traction action on Tuesday and remained confined in a familiar trading range below the 107.00 mark as investors await fresh catalyst before placing any directional bets.

Meanwhile, a turnaround in the global risk sentiment, as depicted by a positive mood around the equity markets, undermined the Japanese yen’s safe-haven demand and was seen as a key factor behind the pair’s modest uptick.

On the other hand, the US dollar struggled to gain any follow-through traction and consolidated the previous day’s goodish intraday gains. This, in turn, might keep a lid on any strong move up for the major, at least for now.

Nevertheless, the pair, for now, seems to have snapped two consecutive days of a negative move, albeit it remains to be seen if bulls are able to capitalize on the move amid concerns over a US-China spat about the origin of the coronavirus.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data might influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch