USD/JPY: Limited chances to advance beyond 105.00

The dollar advanced alongside fears at the beginning of the day, amid rising coronavirus contagions worldwide. The USD/JPY pair is marginally higher, trading in the 104.80 region after flirting with the 105.00 figure but its bullish potential is limited, according to FXStreet’s Chief Analyst Valeria Bednarik.

Key quotes

“The WHO reported three consecutive days of record cases, with multiple European countries reporting levels of contagions above those seen between March and April.”

“Asian indexes are mixed, while European ones trade in the red, these last undermined by soft German data. US Treasury yields are down weighed by covid-related concerns and the absence of progress in a US stimulus package, all of which limits the bullish potential of USD/JPY.”

“Japan published the September Corporate Service Price Index, which improved from 1.1% to 1.3% YoY. The August Economic Index came in at 88.4, missing expectations of 88.8 The Coincident Index for the same month printed at 79.2, also below the market’s forecast. The US will publish the September Chicago Fed National Activity Index, New Home Sales for the same month and the October Dallas Fed Manufacturing Business Index.”

“Selling interest is aligned around the 105.00 level, and it seems unlikely that the USD/JPY pair could advance beyond that level, as the greenback lacks self strength, appreciating only on demand for safety, which also means yen demand.”