- USD/JPY once again struggled to find acceptance above 108.00 mark amid some USD weakness.
- The greenback witnessed some selling amid the latest optimism over the treatment for COVID-19.
- The prevailing risk-on mood weighed on the JPY’s safe-haven status and might help limit the slide.
The USD/JPY pair traded with a mild negative bias through the early European session and is currently placed near the lower end of its daily trading range, around the 107.65-70 region.
The pair continued with its struggled to find acceptance above the 108.00 round-figure mark and witnessed a modest pullback on Friday, snapping two consecutive days of winning streak. The pair stalled this week’s recovery move from the vicinity of monthly lows support near the 106.95-90 region and the downtick was sponsored by a broad-based US dollar weakness.
The greenback struggled to capitalize on its strong positive move witnessed over the past two trading sessions and turned out to be one of the key factors that exerted some pressure on the major. The latest optimism over the treatment for COVID-19 virus boosted investors’ confidence and dampened the USD’s status as the global reserve currency.
According to reports, Gilead Sciences’ clinical trials of its antiviral drug remdesivir showed promising results in treating symptoms associated with the coronavirus. This came after the US President Donald Trump hinted at the reopening of the economy and led to a turnaround in the global risk sentiment, which was evident from strong gains in the equity markets.
The risk-on flows weighed on the Japanese yen’s safe-haven demand, which extended some support to the major and helped limit deeper losses. Moreover, persistent uncertainty about the economic fallout from the coronavirus pandemic, illustrated by the incoming US macro data, might further contribute towards limiting the downside, at least for the time being.
Hence, it will be prudent to wait for some strong follow-through selling before traders again start positioning for the resumption of the pair’s depreciating move. In the absence of any major market-moving economic releases, developments surrounding the coronavirus saga might continue to play a key role in influencing the pair’s momentum on the last day of the week.
Technical levels to watch
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