USD / JPY at five-week lows near 104.00 level

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  • USD / JPY is moving negative for the third day in a row on Thursday.
  • Concerns about rising COVID-19 cases benefit the safe haven JPY and put some pressure on the pair.
  • A modest pickup in USD demand could help limit the deeper losses ahead of the release of US Q3 GDP.

The pair USD/JPY is extending its steady retracement slide, from the daily highs of 104.50, and has now fallen to new five-week lows near 104.00 level, at levels not seen since last September 21.

The pair has been unable to capitalize on its initial rally and has encountered new selling at higher levels, falling into negative territory for the third day in a row Thursday. As investors looked beyond the latest Bank of Japan monetary policy update, the Japanese yen has strengthened again amid growing market concerns about the increase in the number of coronavirus cases.

It is worth reporting that JPY weakened a bit during the Asian session after the Bank of Japan lowered its growth and inflation forecasts for fiscal 2020/21 at the end of the October policy meeting. In the press conference after the meeting, the BoJ governor, Haruhiko Kuroda said that the central bank is ready to ease monetary policy without hesitation if necessary.

Meanwhile, investors continue concerned that new lockdown measures to curb the second wave of coronavirus infections could derail the tepid global economic recovery. Additionally, the stock markets trimmed some of their initial gains, which in turn has offered some support to the safe-haven JPY and prompted further selling around the USD / JPY pair.

However, a modest pickup in demand for the US dollar could help limit deeper losses, At least for the moment. That said, the uncertain political environment in the US could prevent the bulls from opening new positions and limit any attempts to rally the USD / JPY pair.

Market participants are now awaiting the release of the US Q3 GDP Advanced Report. Any significant divergence from expected figures will influence USD price dynamics. This, coupled with broader market risk sentiment, could generate some short-term trading opportunities at the start of the American session.

Credits: Forex Street

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