- USD / JPY manages to bounce around 20-25 pips from the lows, although it lacks continuation.
- Fiscal stimulus in the US and pessimistic expectations from the Fed weigh on the USD and limit the pair’s gains.
- Optimism for the COVID-19 vaccine weighs on the JPY and helps limit the slide before the NFP.
The pair USD/JPY moves slightly higher during the European session on Friday although remains trapped within a range, around the 104.00 level, waiting for the NFP.
The pair has managed to find some support near the 103.65 region and has moved higher during the early part of the trading action on the last day of the week. But nevertheless, the rebound attempt has lacked continuation and remained limited around the 104.00 level amid a softer tone around the US dollar.
The dollar has struggled to register a significant recovery and remains weak near a two-and-a-half-year low amidst the growing expectations of more additional fiscal stimulus in the United States to help the American economy. It’s worth reporting that a $ 908 billion COVID-19 relief package was gaining traction in the US Congress on Thursday.
Furthermore, investors continue convinced the Fed will expand its bond-buying program in December amid concerns about the economic fallout of the continued increase in new coronavirus cases. This is also seen as a key factor weighing on the dollar and limiting the USD / JPY pair.
Having said that, recent optimism about the launch of a coronavirus vaccine continues to support optimistic market sentiment. The cash flow of risk appetite has weighed on the demand for the Japanese yen safe haven and could help limit USD / JPY losses, at least for now.
Investors also seem reluctant to open aggressive positions, preferring to wait on the sidelines before the release of monthly U.S. employment details on Friday. The NFP report will influence the USD price dynamics and could generate further trading momentum to the USD / JPY pair.
USD / JPY technical levels
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