- USD / JPY extends its sideways consolidation for the second day in a row on Tuesday.
- Weaker global risk sentiment underpins the safe haven JPY and limits the pair’s rally.
- A modest rally in the USD helps limit the slide ahead of key US events this week.
The pair USD/JPY you are struggling to find a firm directional bias and remain stuck within a range, around the region of 103.75, at the start of the European session on Tuesday.
A combination of divergent factors has failed to provide significant momentum to the pair and has led to moderate price action and limited within a range for the second day in a row on Tuesday. A modest pickup in demand for the US dollar has offered some support to the USD / JPY pair, although a weaker tone around equity markets has benefited the safe-haven Japanese yen and limited the pair’s gains.
German data released on Monday added to concerns on the economic consequences of the strict restrictions due to the coronavirus and clouded the market sentiment. Further, persistent concerns about potential obstacles to the $ 1.9 trillion stimulus plan US President Joe Biden and escalating tensions between the United States and China in the South China Sea have further weighed on investor sentiment.
The lowest appetite for risk has been seen bolstered by the current drop in US Treasury yields to three-week lows, which has further helped limit any significant rise in the USD / JPY pair. That said, investors now seem reluctant to open aggressive positions, preferring to wait on the sidelines before the FOMC’s latest monetary policy decision on Wednesday.
This will be followed by the release of the preliminary US fourth quarter GDP report on Thursday. Apart from this, investors will also focus attention on the timing and size of the US fiscal stimulus package. This, along with developments related to the coronavirus saga, will influence USD price dynamics and help investors determine the next directional movement for the USD / JPY pair.
USD / JPY technical levels
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