- Sustained USD selling bias failed to assist USD/JPY to capitalize on its early uptick to the 104.55 area.
- COVID-19 vaccine optimism undermined the safe-haven JPY and might help limit losses for the pair.
- Investors now eye US Initial weekly Jobless Claims and ISM Services PMI for some trading impetus.
The USD/JPY pair witnessed some selling in the last hour and refreshed daily lows, around the 104.35 region amid a broad-based US dollar weakness.
The pair failed to capitalize on its early uptick to the 104.55 region, instead met with some fresh supply and extended the previous day's retracement slide from one-week tops. The bearish pressure surrounding the USD remained unabated through the first half of the trading action on Thursday, which, in turn, was seen as a key factor exerting some pressure on the USD/JPY pair.
Hopes for additional US fiscal stimulus measures to aid the pandemic-hit US economy revived following the release of ADP report on Wednesday. According to ADP, the US private-sector employers added 307K jobs in November as against 410K anticipated and added to growing market worries about the economic fallout from the imposition of recent COVID-19 restrictions in several US states.
That said, the latest optimism over the first approval of a COVID-19 vaccine undermined the safe-haven Japanese yen and might help limit further losses for the USD/JPY pair. It is worth recalling that the UK on Wednesday became the first country to approve a vaccine jointly developed by Pfizer and BioNTech and said to start inoculation of those most as risk early next week.
This makes it prudent to wait for some strong follow-through selling before confirming that this week's bounce from the 103.80 region has already run out of the steam and positioning for any further depreciating move. In the meantime, Thursday's releases of the Initial Weekly Jobless Claims and ISM Services PMI from the US might produce some trading opportunities around the USD/JPY pair.
Technical levels to watch
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