USD/JPY quickly reverses a dip to session lows, turns neutral around 107.60-65

The USD/JPY pair dropped to fresh session lows, around the 107.40 region during the early North American session, albeit quickly recovered few pips thereafter.

The pair continued with its struggle to make it through 50-day SMA hurdle and once again witnessed an intraday pullback from levels just ahead of the 108.00 round-figure mark amid some aggressive US dollar selling.

The easing of lockdown restriction across the world raised hopes that the global economy is moving towards recovery. This coupled with the latest optimism over a potential COVID-19 vaccine boosted investors' confidence.

This, in turn, dampened the greenback's status as the global reserve currency and prompted some intraday selling around the major. The USD remained depressed and failed to gain respite from Tuesday's US macro data.

In fact, the Conference Board's US Consumer Confidence Index came in at 86.6 for May and the previous month's reading was revised down to 85.7 from 86.9 reported earlier. The data, however, did little to impress the USD bulls.

Meanwhile, the upbeat market mood undermined the Japanese yen's safe-haven demand and helped limit deeper losses. Adding to this, a goodish pickup in the US Treasury bond yields also extended some support and led to a modest bounce.

The pair was last seen trading in the neutral territory, around the 107.60-65 region. The recent price action has been confined in a narrow trading range, warranting some caution before traders start positioning for a firm near-term direction.

Technical levels to watch