- USD/JPY witnessed some fresh selling on Thursday amid the downbeat market mood.
- A modest USD uptick extended some support to the pair and helped limit the downside.
- Powell rejected the idea of negative rates and provided a modest lift to the greenback.
The USD/JPY pair edged lower through the Asian session and was last seen hovering around the lower end of its daily trading range, near the 106.85-80 region.
The pair failed to capitalize on the previous day's attempted recovery move, instead met with some fresh supply on Thursday and was being weighed down by reviving demand for the safe-haven Japanese yen. Growing fears about the second wave of coronavirus infections, coupled with fading hopes for a quick economic recovery weighed on investors' sentiment and was evident from a weaker tone around the equity markets.
Meanwhile, the negative factor, to some extent, was negated by a modest US dollar uptick, which seemed to be the only factor lending some support to the USD/JPY pair and might help limit deeper losses, at least for now. The greenback remained well supported by the fact that the Fed Chair Jerome Powell rejected the idea of negative rates. Powell also said that the economic path remains uncertain and was subject to downside risks.
It will now be interesting to see if the pair is able to attract any buying interest at lower levels or the ongoing slide marks the end of the recent bounce from multi-week lows, setting the stage for additional weakness. Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data might influence the USD price dynamics and produce some meaningful opportunities later during the early North American session.
Technical levels to watch
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