USD/JPY flirts with session lows, around 104.70 region
|- USD/JPY failed to capitalize on its Asian session uptick to the 105.00 neighbourhood.
- The prevalent cautious mood benefitted the safe-haven JPY and prompted some selling.
- Uncertainty over additional US stimulus measures held the USD bulls on the defensive.
The USD/JPY pair remained depressed near the lower end of its Asian session trading range and was seen oscillating in a range, around the 104.70 region.
The pair attempted to build on the previous day's goodish positive move and gained some traction during the early part of the trading action on Friday. The Japanese yen weakened a bit after data released from Japan showed that the economy is facing coronavirus-induced deflationary pressure. In fact, Japan's core consumer price index slipped for the second straight month in September and fell 0.3% YoY as compared to the previous month's 0.4% decline.
Adding to this, the flash version of the Japanese Manufacturing PMI fell short of market expectations and remained in the contraction territory. The negative factors, to a larger extent, were negated by the underlying caution in the markets and an uncertain US political environment. This, in turn, extended some support to Japanese yen's safe-haven status and kept a lid on any strong gains for the USD/JPY pair, rather prompted some selling at higher levels.
Meanwhile, fading hopes for a pre-election US stimulus package held the US dollar bulls from placing any aggressive bets and further contributed to the USD/JPY pair's modest intraday pullback of around 25-30 pips. Despite the positive developments over the next round of the US fiscal stimulus measures, investors seemed unconvinced that the bill could actually pass through the Senate amid strong opposition from Republicans over a bigger stimulus bill.
It is worth recalling that House of Representatives Speaker Nancy Pelosi said on Thursday that stimulus talks were on a good path and they will soon be ready to put pen to paper on the stimulus bill. Pelosi further added that the aid bill could be passed in the House before the election day.
It will now be interesting to see if the USD/JPY pair is able to attract any fresh buying or the latest leg down points to the emergence of some fresh selling, paving the way for an extension of this week's sharp retracement slide.
Technical levels to watch
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