USD/JPY clings to modest gains near daily tops, around 104.70 region

The USD/JPY pair traded with a positive bias through the early North American session and was last seen trading near the top end of its daily trading range, around the 104.70 region.

A goodish pickup in the US dollar demand assisted the pair to gain some positive traction on Thursday and move away from six-week lows touched in the previous session. However, the prevalent cautious mood around the equity markets extended some support to the Japanese yen's safe-haven status and might keep a lid on any meaningful upside for the USD/JPY pair.

The greenback attracted some buying amid the slow progress in the US stimulus talks, which dampened prospects for pre-election fiscal measures. Investors largely shrugged off and seemed rather unimpressed by House of Representatives Speaker Nancy Pelosi's optimistic remarks, saying that 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 election day. Given the strong opposition from Republicans over a bigger stimulus bill, investors seemed unconvinced that the bill could actually pass through the Senate. This, in turn, weighed on investors' sentiment and the same was evident from a flat opening in the US equity markets.

Apart from developments surrounding the US fiscal stimulus, the USD bulls further took cues from Thursday's better-than-expected release of the US Initial Weekly Jobless Claims. In fact, the number of Americans who filed for unemployment insurance for the first time dropped to 787K as compared to the previous week's downwardly revised reading of 842K.

The focus now shifts to the final presidential debate between President Donald Trump and his Democratic rival Joe Biden. This makes it prudent to wait for some strong follow-through buying before confirming that the USD/JPY pair might have found an interim bottom and positioning for any further appreciating move.

Technical levels to watch