- The nerves surrounding COVID-19 continue to benefit the safe haven JPY and weigh on the USD / JPY.
- Falling US bond yields keeps USD bulls on the defensive and puts some pressure on the pair.
- An increase in new coronavirus cases in Japan helps limit the deepest losses for the pair.
The pair USD/JPY has moved lower at the start of the European session on Thursday, falling to the 107.80 region and staying under pressure near multi-week lows.
The pair, so far, has struggled to achieve significant traction and has been under pressure near multi-week lows. Renewed fears about another dangerous wave of coronavirus infections in some countries have continued to weigh on investor sentiment, benefiting the safe-haven Japanese yen.. This, coupled with the current drop in US Treasury yields, has limited the rise of the USD / JPY pair.
In fact, the 10-year US government bond yield has extended its recent sharp pullback from a 14-month high of 1.78% and trading around 1.536%, not far from the lowest level since mid-March. This comes amid expectations that the Fed will keep interest rates near zero for a longer period, which has kept the US dollar bulls on the defensive and has not helped the USD / JPY pair to register. even a modest recovery.
The negative factors, to a greater extent, have been offset by concerns about an increase in severe cases of mutant strains of COVID-19 in Japan. The Fourth wave has forced the Japanese government to consider imposing a new state of emergency in Tokyo, as well as in Osaka, Kyoto and Hyogo prefectures. on Friday. This, in turn, has limited any significant gains for the JPY and appears to be the only factor that has helped limit losses for the USD / JPY pair.
Market participants now await the release of the data from the initial weekly US jobless claims. Apart from this, the US bond yields will influence the USD price dynamics and give some boost to the USD / JPY. Investors will follow the signs of broader market risk sentiment for some short-term opportunities.
USD / JPY technical levels
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