USD / JPY negative around 105.30-25 region

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  • USD / JPY witnesses some new selling on Friday and returns a portion of the previous day’s gains.
  • A modest USD pullback and weaker US bond yields put downward pressure on the pair.
  • The decline remains limited, which warrants some caution before opening new bearish positions.

The pair USD/JPY remains on the defensive at the start of the European session on Friday, although has managed to recoup a portion of its initial losses to the region of 105.20-15At the time of writing, the pair remains negative on the day, around the 105.30 region.

The pair has found new sales on the last trading day of the week and has returned a part of the positive movement of the previous day from around 45 pips, from near the key psychological level of 105.00. The fall is due exclusively to a modest US dollar declineAlthough the signs of stability in the stock markets have affected the demand for the safe haven Japanese yen and helped limit the decline in the USD / JPY pair.

The dollar has weakened during the first half of trading action on Friday amid Diminished Hopes for Additional US Fiscal Stimulus Measures before the US presidential election on November 3. Additionally, the decline in US Treasury yields is also weighing on the USD. However, Concerns about a sharp increase in new coronavirus cases in Europe and the US have offered some support to the USD as a world reserve currency.

The lack of a solid continuation sell warrants some caution for bears. This makes it prudent to wait for a sustained break below the key psychological level of 105.00 before positioning for any other short-term downside in the pair.

Market participants now await release of US monthly retail sales data Friday’s US economic calendar also features industrial production data and preliminary estimate of the University of Michigan consumer sentiment index for October. This, coupled with broader market risk sentiment, could lead to some short-term business opportunities.

USD / JPY technical levels

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Credits: Forex Street

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