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USD/JPY: Vaccine optimism helps to limit losses

A softer risk tone benefitted the safe-haven JPY and exerted some pressure on the USD/JPY pair though the latest optimism over COVID-19 vaccine rollout limits the downside, at least for now, FXStreet’s Haresh Menghani reports.

Key quotes

“Thursday’s disappointing release of US Initial Jobless Claims added to market worries about the potential economic fallout from the continuous surge in new coronavirus cases. This, along with the uncertainty over the latest US fiscal stimulus measures and post-Brexit trade talks, dented investors’ confidence. The US lawmakers approved a stopgap government funding bill on Wednesday but have been struggling to hammer out an agreement on the broader COVID-19 relief package.”

“US authorities voted overwhelmingly to endorse emergency use of Pfizer’s COVID-19 vaccine. The rollout of another vaccine for the highly contagious coronavirus disease revived hopes for a swift global economic recovery.”

“It will still be prudent to wait for some follow-through selling below the 103.90 level before positioning for any further depreciating move. The next relevant support is pegged near the 103.65 area, below which the pair is likely to accelerate the fall further towards November monthly swing lows support, around the 103.20-15 region.”

“The 104.25-30 zone now seems to act as immediate resistance. A sustained strength beyond has the potential to lift the pair further towards a strong hurdle near the 104.75 region. This is followed by resistance near the key 105.00 psychological mark.”

 

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