USD / JPY recovers from slide to 103.90, still negative near multi-day lows

• USD / JPY is witnessing some selling for the second day in a row on Friday.
• A softer tone around the USD is seen as a key factor putting pressure on the pair.
• Optimism over the COVID-19 vaccine weighs on the safe-haven JPY and helps limit the pair’s slide.

The pair USD/JPY remains under pressure at the start of the European session on Friday, although recovers slightly from the 103.90 region, a four-day lows reached during the Asian session. At time of writing, the pair remains negative on the day around the 104.00 level.

The pair has extended this week’s retracement drop from the 104.75 region and witnessed some continuation sales for the second day in a row on Friday. The fall also marks the third day of negative movement of the previous four and is due to the prevailing selling bias around the US dollar.

The concerns about economic consequences from the imposition of new restrictions on COVID-19 in several US states have resurfaced after an unexpected increase in initial weekly jobless claims in the US This, in turn, has revived hopes for additional fiscal stimulus in the United States by the incoming Biden administration, which has continued to weigh on the USD.

Apart from this, a further downward movement in US Treasury yields has put some additional pressure on the dollar and further contributed to the current decline in the USD / JPY pair. But nevertheless, optimism about a coronavirus vaccine has weighed on the safe-haven Japanese yen and helped limit losses deeper.

The USD / JPY pair has managed to bounce a few pips from the lows, although any significant rally still seems elusive. Therefore, any subsequent positive movement could still be seen as a selling opportunity and risks fading quickly amid the absence of relevant economic releases on Friday.

USD / JPY technical levels