- A combination of diverging forces failed to provide any meaningful impetus to the USD/JPY.
- Upbeat Japanese GDP report, softer risk tone benefitted the safe-haven JPY and capped gains.
- An uptick in the US bond yields extended some support to the USD and helped limit the downside.
The USD/JPY pair lacked any firm directional bias and remained confined in a narrow trading band, around the 104.00 mark through the Asian session.
A mixed performance in the equity markets extended some support to the safe-haven Japanese yen, which was further supported by better-than-expected Japanese Q3 GDP report. In fact, Japan’s economy expanded by 5.3% QoQ as against 5.0% estimated originally and the annualized growth rate stood at 22.9% vs. 21.5% forecast. This, in turn, was seen as one of the key factors that kept a lid on any meaningful move up for the USD/JPY pair.
The negative factor, to some extent, was negated by a modest pickup in the US Treasury bond yields, which extended some support to the US dollar. Apart from this, worries about the continuous surge in new coronavirus cases further benefitted the greenback’s global reserve currency status and helped limit the downside for the USD/JPY pair, rather led to a subdued/range-bound price action through the first half of the trading action on Tuesday.
The USD bulls, however, seemed reluctant to place fresh bets amid expectations that US lawmakers will agree to an emergency COVID-19 stimulus plan. This was also cited as a key factor that held the USD/JPY pair within the previous day’s trading range. This makes it prudent to wait for a sustained move in either direction before positioning for any meaningful intraday move amid absent relevant market moving economic releases from the US.
Technical levels to watch
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