- USD / JPY finds some selling on Tuesday and extends the pullback from the three-day highs.
- Political uncertainty in the US keeps USD bulls on the defensive and puts some pressure on the pair.
- The nervousness over the coronavirus and the fiscal impasse in the US benefits the safe-haven JPY and adds to the selling bias.
The pair USD/JPY moves slightly lower at the start of the European session on Tuesday, just below the 104.80 level, extending the pullback from the three-day highs reached on Monday.
The pair is extending the previous day’s retracement drop from the three-day highs, from above the key psychological level of 105.00, and remains under pressure during the first half of trading action on Tuesday. Firm Market Expectations for a Strong Democratic Victory in the Upcoming US Election has kept the dollar bulls on the defensive, which in turn has been seen as a key factor putting some pressure on the USD / JPY pair.
Meanwhile, the rising market concerns about possible economic impact of renewed lockdown measures to curb the increasing number of COVID-19 cases have weighed on investor sentiment. This, along with lack of progress in US stimulus talks, has cooled market sentiment and benefited the safe-haven Japanese yen.
From a technical perspective, the USD / JPY is now flirting with the lower bound of a multi-day bullish channel. A convincing breakout will be seen as a new trigger for the bears and will set the stage for a drop towards the September low support, around the round level of 104.00.
Market participants are now turning their attention to the US economic calendar, where the publication of durable goods orders stands out. Aside from this, broader market risk sentiment, US stimulus news, and developments related to the coronavirus saga could help investors seize some short-term opportunities.
Credits: Forex Street
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