- USD / JPY continued to attract some buying on the dips before the 104.00 level.
- A modest rebound in equity markets undercut the Japanese yen – safe haven.
- A sudden spike in US bond yields continued to support the rally.
The pair USD/JPY it recovered more than 50 pips from intraday lows and updated daily highs around the 104.65 region during the early days of the American session.
The pair continued to show some resistance at lower levels and once again managed to attract some buying below 104.00, despite a softer tone surrounding the US dollar. Growing wariness about the actual outcome of the US presidential election next week prevented dollar bulls from making any new bets, rather sparked profit-taking.
The negative factor, to a greater extent, was offset by a positive rally in the US equity markets, which undermined demand for the Japanese yen as a safe haven. Bullish traders followed signs of a sudden spike in U.S. Treasury yields. This, along with concerns about potential economic fallout from renewed COVID-19 restrictions, helped limit the USD’s slide.
Second-tier US economic data, mostly upbeat, on Friday did little to impress USD bulls or provide a significant boost to USD / JPY. This was evident by the lack of strong follow-up buying, which warrants some caution for bull traders and before positioning for any further appreciation movement on the last trading day of the week.
However, the USD / JPY has reversed a significant portion of its weekly losses and, for now, it appears to have formed a solid base near 104.00. That being said, a sustained advance in the aforementioned support will be seen as a further trigger for bearish traders and will set the stage for further weakness, possibly towards the 103.10-103.00 test region.
Technical levels
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Credits: Forex Street
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