USD/JPY struggles below 104.00 mark amid softer risk tone
|- Optimism over the resumption of US fiscal aid talks assisted USD/JPY to gain some traction.
- COVID-19 jitters, the downbeat market mood and dovish Fed expectations capped the upside.
The USD/JPY pair traded with a mild positive bias through the Asian session, albeit lacked any follow-through buying and remained capped below the 104.00 mark.
Following the previous day's intraday pullback of around 50 pips, the pair managed to regain some positive traction on Friday and for now, seems to have snapped six consecutive days of losing streak. The uptick was supported by optimism over reports that US Senate Republican and Democrat leaders had agreed to resume negotiations on another coronavirus stimulus package.
That said, a fresh leg down in the US equity markets underpinned demand for the safe-haven Japanese yen and kept a lid on any further gains for the USD/JPY pair. The global risk sentiment took a hit after the US Treasury Secretary Steven Mnuchin requested the Fed to return funds earmarked for COVID-19 lending to struggling businesses, nonprofits and local governments.
This comes on the back of growing market worries about the economic fallout from the imposition of new coronavirus restrictions in several US states and further fueled speculations for additional monetary easing by the Fed. This was evident from the ongoing slide in the US Treasury bond yields, which weighed on the US dollar and collaborated towards capping the USD/JPY pair.
There isn't any major market-moving economic data due for release from the US on Friday. However, developments surrounding the coronavirus saga will continue to influence the safe-haven JPY. This, along with the USD price dynamics should assist traders to grab some short-term opportunities on the last day of the week.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.