USD/JPY’s upside attempts remain capped below 104.75
|- USD/JPY rebound from 104.00, limited below 104.75
- The dollar is consolidating losses with the investors in a cautious mood.
- Breach of 104.00 might accelerate USD's downtrend.
The US dollar is trading on a slightly negative tone against the Japanese yen on Friday, with the pair’s recovery from 104.00 low on Thursday stalling below 104.75.
Dollar consolidates losses in a cautious market
The greenback has been moving back and forth within previous ranges on Friday, unable to stage a significant recovery from a key support level at 104.00. Growing concerns about the economic impact of the second round of lockdowns in Europe and the cautious market mood anticipating a contested election in the US are keeping USD/JPY bulls in check.
On the macroeconomic front, the upbeat US personal income and outlays data, which has shown larger than expected increases in September, have been practically ignored by the markets.
USD/JPY's downtrend might accelerate below 104.00
A technical perspective shows the pair is neutral, on the short-term with risks skewed to the downside, according to FXStreet’s Chief Analyst Valeria Bednarik, who points out to key support at 104.00: “The 4-hour chart shows that the pair was unable to retain ground above a bearish 20 SMA, currently below it. The 100 and 200 SMAs maintain their bearish slopes well above the shorter-one, all of them indicating prevalent selling pressure. Technical indicators, in the meantime, hover within neutral levels, without clear directional strength (…) The USD/JPY pair has bottomed around 104.00 in September, and once again this October, with a break below the region opening doors for a steeper decline.”
Technical levels to watch
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