USD/JPY jumps back above mid-104.00s, lacks follow-through
|- USD/JPY continued attracting some dip-buying ahead of the 104.00 mark.
- A modest bounce in the equity markets undermined the safe-haven JPY.
- A sudden pickup in the US bond yields remained supportive of the uptick.
The USD/JPY pair recovered over 50 pips from intraday lows and refreshed daily tops, around the 104.65 region during the early North American session.
The pair continued showing some resilience at lower levels and once again managed to attract some dip-buying ahead of the 104.00 round-figure mark, despite a softer tone surrounding the US dollar. Growing wariness about the actual outcome of the US presidential election next week held the USD bulls from placing fresh bets, rather prompted some profit-taking.
The negative factor, to a larger extent, was offset by a goodish rebound in the US equity markets, which undermined demand for the safe-haven Japanese yen. Bullish traders further took cues from a sudden spike in the US Treasury bond yields. This, along with concerns about the potential economic fallout from renewed COVID-19 restrictions helped limit the USD downfall.
Friday's mostly upbeat second-tier US economic data did little to impress the USD bulls or provide any meaningful impetus to the USD/JPY pair. This was evident from the lack of any strong follow-through buying, which warrants some caution for bullish traders and before positioning for any further appreciating move on the last trading day of the week.
Nevertheless, the USD/JPY pair has now reversed a major part of its weekly losses and for now, seems to have formed a strong base near the 104.00 mark. That said, a sustained breakthrough the mentioned support will be seen as a fresh trigger for bearish traders and set the stage for additional weakness, possibly towards testing the 103.10-103.00 region.
Technical levels to watch
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