- USD/JPY managed to find decent support just ahead of the 104.00 round-figure mark.
- A fresh leg down in the equity markets and the US bond yields kept a lid on the bounce.
- Investors now look forward to the US CPI and US 2021 fiscal budget for a fresh impetus.
The USD/JPY pair recovered around 125 pips from daily lows, albeit seemed struggling to find acceptance above the key 105.00 psychological mark.
The pair failed to capitalize on the previous day's strong rally of nearly 400 pips and came under some fresh selling pressure on Wednesday amid fading optimism over the US President Donald Trump's proposed economic stimulus package.
This coupled with reviving fears that the coronavirus will have a major impact on the global economy weighed on investors' appetite for riskier assets. This was evident from some renewed weakness in the equity markets and benefitted the Japanese yen's safe-haven status.
The anti-risk flow was reinforced by a fresh leg down in the US Treasury bond yields, which eventually kept a lid on the overnight US dollar rebound and further contributed to the pair's early slide to the vicinity of the 104.00 round-figure mark.
Despite a combination of negative factors, the pair managed to attract some dip-buying and rallied back above the 105.00 mark. Bulls, however, failed to capitalize on the momentum, rather preferred to wait on the sidelines ahead of Wednesday's important releases.
The US economic docket highlights the release of the latest consumer inflation figures. Adding to this, the US Treasury Secretary Steven Mnuchin will testify on the Proposed Fiscal Year 2021 Budget, which might now play a key role in determining the pair's next leg of a directional move.
Technical levels to watch
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