USD / JPY struggles near multi-month lows, just below 103.00

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  • A combination of factors triggered new selling around USD / JPY on Tuesday.
  • The prevailing bearish sentiment around the USD was seen to exert some pressure.
  • A cautious mood benefited the safe haven JPY and contributed to the selling bias.

The USD sell bias remained constant for the middle of the European session and dragged the pair down USD/JPY even more below 103.00. The pair was last seen trading around the 102.85 region, down around 0.25% on the day.

The pair was unable to capitalize on the modest bounce the day before from multi-month lows, but instead encountered a new offer on Tuesday and was being pressured by a combination of factors. The US dollar remained depressed near its two-and-a-half-year lows amid the likelihood of more US financial aid packages and expectations that the Fed will keep interest rates lower for a longer period.

Meanwhile, uncertainty about the second round of the US Senate in Georgia dampened recent market enthusiasm. This, in turn, benefited the safe haven Japanese yen and put additional downward pressure on the USD / JPY pair. The result of two Senate seats will have an impact on incoming President Joe Biden’s ability to pursue his preferred economic policies, including pushing for stimulus.

According to economists at TD Securities, the US dollar could see further downside momentum if Democrats swap both Georgia seats. Republicans need to win only one of the two GA races on Tuesday to remain the majority party in the Senate, but the polls have moved in favor of the Democrats and the odds of betting have been reduced. The Ossoff-Perdue race is expected to be the closer of the two. “

Meanwhile, traders are likely to follow the signals from the US economic agenda, with the release of the manufacturing PMI ISM highlighting. Aside from this, the events surrounding the coronavirus saga could continue to drive overall market risk sentiment. This, in turn, could influence safe haven demand for the JPY and help investors seize some short-term trading opportunities.

Technical levels

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