- USD JPY remains trapped within a narrow range below the round level of 104.00.
- Optimism over the COVID-19 vaccine weighs on the safe haven JPY and offers some support.
- Pessimistic expectations from the Fed weigh on USD bulls and limit the pair’s rise.
The pair USD/JPY is extending its sideways consolidation move at the start of the European session on Monday and remains trapped within a narrow range below the round 104.00 level.
A combination of divergent factors has failed to provide significant momentum to the pair and has led to moderate and limited price action on the first day of a new trading week. Optimism about the prospect of an early launch of coronavirus vaccines has weighed on the Japanese yen’s demand for safe haven. This, in turn, has been seen as a key factor lending some support to the USD / JPY pair.
However, the rise in the pair remains limited, at least for the moment, amid weaker tone around the US dollar. Concerns about the economic consequences of the imposition of new restrictions due to COVID-19 in several US states have fueled the speculation about additional monetary easing by the Fed. This, coupled with falling US Treasury yields, has kept the USD bulls on the defensive.
Therefore, the key focus of attention will be on this week’s publication of the minutes of the last FOMC meeting, which will be scrutinized for the possibility of such action as early as the December meeting. Meanwhile, broader market risk sentiment and USD price dynamics could continue to play a key role in influencing the USD / JPY pair and helping investors seize some short-term opportunities.
Apart from this, investors could also follow the signs of Monday’s release of the US manufacturing and services PMI. for October, which will be announced at the beginning of the American session.
USD / JPY technical levels
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