- USD/JPY met with some fresh supply and eroded a part of the overnight strong gains.
- Reviving safe-haven demand, a modest USD pullback contributed to the weaker tone.
- Some follow-through uptick in the US bond yields might help limit losses, at least for now.
The USD/JPY pair dropped to fresh session lows in the last hour, with bears now looking to extend the fall further below the 107.00 round-figure mark.
The pair failed to capitalize on the previous day’s strong intraday positive move of over 200 pips and met with some fresh supply during the Asian session on Wednesday amid reviving demand for traditional safe-haven assets.
Despite coordinated efforts by global central banks and various government measures to offset the economic fallout from the coronavirus pandemic, fears of an imminent global recession continued weighing on investors’ sentiment.
This was evident from a fresh leg down in equity markets, which benefitted the Japanese yen’s perceived safe-haven status and turned out to be one of the key factors that exerted some fresh downward pressure on the major.
On the other hand, the US dollar witnessed a modest pullback following the overnight strong rally and added to the selling bias around the major. However, some follow-through uptick in the US Treasury bond yields might help limit deeper losses.
It will now be interesting to see if the pair is able to attract some dip-buying or continues with its intraday pullback as the focus remains on any fresh developments surrounding the coronavirus saga amid absent relevant economic releases.
Technical levels to watch