- USD/JPY gained traction for the third straight day and recovered further from multi-month lows.
- Sustained USD buying interest amid concerns about rising COVID-19 cases remained supportive.
- The prevalent risk-on mood undermined the safe-haven JPY and provided an additional boost.
The prevalent USD buying interest pushed the USD/JPY pair to one-week tops, around the 105.20 region during the Asian session on Wednesday.
A combination of factors assisted the pair to gain traction for the third consecutive session and build on this week's goodish recovery move from the 104.00 mark, or over six-month lows touched on Monday. Concerns about the second wave of coronavirus infections and fears of renewed lockdown measures to contain the outbreak continued benefitted the US dollar's status as the global reserve currency.
The greenback was further supported by the overnight hawkish comments by Chicago Fed President Charles Evans, saying that further quantitative easing may not provide additional lift to the US economy. Evans further added that it is possible for the Fed to raise interest rates before inflation starts to average 2%, though acknowledged the risk of longer, slower economic recovery and recessionary dynamics if Congress fails to pass an additional fiscal stimulus package.
Apart from a broad-based USD strength, a positive tone around the equity markets undermined the Japanese yen's safe-haven demand and provided an additional boost to the USD/JPY pair. The momentum now seems to have stalled near 200-hour SMA, warranting some caution for bullish traders and before positioning for any further near-term appreciating move.
Meanwhile, developments surrounding the coronavirus saga and the broader market risk sentiment will continue to play a key role in influencing the USD/JPY pair. Later during the early North American session, the release of the flash version of the US Manufacturing and Services PMI prints for September, along with the Fed Chair Jerome Powell's second day of congressional testimony will also be looked upon for some short-term trading opportunities.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD alternates gains with losses near 1.0720 post-US PCE
The bullish tone in the Greenback motivates EUR/USD to maintain its daily range in the low 1.070s in the wake of firmer-than-estimated US inflation data measured by the PCE.
GBP/USD clings to gains just above 1.2500 on US PCE
GBP/USD keeps its uptrend unchanged and navigates the area beyond 1.2500 the figure amidst slight gains in the US Dollar following the release of US inflation tracked by the PCE.
Gold keeps its daily gains near $2,350 following US inflation
Gold prices maintain their constructive bias around $2,350 after US inflation data gauged by the PCE surpassed consensus in March and US yields trade with slight losses following recent peaks.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.