USD/JPY ticks lower on broad USD weakness, trades below 107
|- USD/JPY edges lower pressured by risk-off market environment.
- Major European equity indexes suffer heavy losses on Tuesday.
- USD struggles to find demand as investors wait for FOMC Chairman Powell's speech.
The USD/JPY pair lost around 50 pips on Tuesday and stayed relatively quiet near 107.20 during the first half of the day on Wednesday. However, with risk-off flows starting to dominate financial markets, the JPY gathered strength as a safe-haven and dragged the pair lower. As of writing, USD/JPY was down 0.21% on the day at 106.92.
Earlier in the day, the Current Index and the Outlook Index of Eco Watchers Survey released by Japan's Cabinet Office came in slightly better than expected but failed to help the JPY.
Investors remain cautious on Wednesday
Heightened concerns over a possible second coronavirus wave seem to be weighing on the sentiment. At the moment, Germany's DAX 30 Index and the Euro Stoxx 50 Index are losing 1.22% and 1.35%, respectively.
Despite the sour market mood, the USD is staying on the back foot for the second straight day on Tuesday. Ahead of FOMC Chairman Powell's speech on the state of the US economy, the US Dollar Index down 0.3% at 99.70.
Previewing Powell's speech, “he will likely repeat his general pledge to act whenever needed and that is priced in," noted FXStreet analyst Yohay Elam. "If he goes into specifics and about fresh ideas to stimulate the economy and mentions numbers, the dollar could drop and stocks to rise.”
Technical levels to consider
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