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USD / JPY struggles to gain significant traction, holding steady above 104.50 level

The pair USD/JPY It has returned initial gains to a high of 104.75 and has fallen to daily lows at the start of the European session, around 104.45, although it has lacked a solid continuation. At the time of writing, the pair it rises modestly on the day around 104.65.

The pair has failed to capitalize on its initial raise and has encountered new sales at higher levels, falling around 30 pips from the intraday high of 104.75. Diminishing hopes of US fiscal stimulus measures ahead of the elections have affected global risk sentiment. This, in turn, has benefited the Japanese yen as a safe haven and limited any significant rally for the USD / JPY pair.

The Speaker of the House of Representatives, Nancy Pelosi, will continue talks with the Secretary of the Treasury, Steven Mnuchin, and remains optimistic about reaching an agreement. However, investors remain skeptical that any tax package could pass through the Republican-controlled Senate before the Nov.3 election. Additionally, there remains strong opposition within Trump’s own Republican Party over a larger stimulus bill.

Also, the president of the United States, Donald Trump accused Democrats on Wednesday of being unwilling to reach an acceptable compromise on the stimulus. This comes amid US political uncertainty, which has prevented bulls from opening aggressive positions around the USD / JPY. However, a modest pickup in demand for the US dollar has offered some support And it has helped limit the deepest losses, at least for now.

The USD / JPY pair remains close to one-month lows, around the 104.35 region, touched on Wednesday. Market participants now await the latest presidential debate between incumbent President Trump and Democratic candidate Joe Biden. Meanwhile, the release of initial weekly US jobless claims could generate some short-term opportunities.

Credits: Forex Street

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