USD/JPY clings to modest recovery gains around mid-105s
|- USD/JPY looks to close higher after a two-day slump.
- US Dollar Index climbs above 93.50 on Tuesday.
- Risk aversion helps JPY stay resilient against its rivals.
The USD/JPY closed the previous two trading days in the negative territory and lost more than 70 pips during that period. After staying in a consolidation phase during the first half of the day on Tuesday, however, the pair gained traction and advanced to a daily high of 105.64 during the American session. As of writing, USD/JPY was up 0.24% on a daily basis at 105.55.
DXY climbs above 93.50 on Tuesday
Renewed USD strength on Tuesday fueled USD/CAD's recovery. With North American traders returning after a three-day weekend, the US Dollar Index shot higher in the early trading hours of the American session and was last seen gaining 0.57% on a daily basis at 93.57.
The lack of progress in the US coronavirus relief negotiations seems to be causing investors to stay away from risk-sensitive assets. Reflecting the cautious market mood, both the S&P 500 and the Dow Jones Industrial Average indexes lose around 0.4% on the day.
Meanwhile, safe-haven flows also help the JPY stay resilient against its rivals and cap USD/JPY's upside for the time being. The only data from the US showed on Tuesday that the Consumer Price Index (CPI) in September edged higher to 1.4% on a yearly basis and came in line with analysts' forecasts.
In the early Asian session on Wednesday, Industrial Production and Capacity Utilization data from Japan will be looked upon for fresh impetus.
Technical levels to watch for
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