- USD/JPY recovery fails at 107.15 and the pair struggles to hold above 107.00
- The Japanese yen prevails on a risk-averse market in spite of a tame dollar rebound after Powell’s speech.
- A decline past 106.60 might weaken the overall upward trend – UOB.
The US dollar recovery attempt witnessed after Fed Powell’s speech has been capped at 107.15. The pair has retreated to 106.88, with the JPY favoured by the overall risk-off mood and is attempting to regain 107.00 at the time of writing.
The Japanese yen prevails on risk aversion
The USD/JPY rebound from 105.98 lows last week was rejected on Monday right below the 108.00 level, and the pair has given away gains over the last two days, returning to levels sub 107.00. The sour market sentiment on growing fears about a second wave of the pandemic and the looming US-China tensions are weighing on the USD in favour of the safe-haven yen.
The pair attempted to bounce up from session lows at 106.75 on Wednesday, with the USD buoyed by Powell’s comments denying the idea of negative interest rates. The movement lacked strength, however, and the greenback turned back at 107.14, with the yen gaining traction on a risk-averse market.
Key support level at 106.60 – UOB
FX analysts at UOB warn about a slide below 106.60: “While upward momentum has picked up considerably, USD has to clear the 107.80 resistance first before further sustained advance can be expected (next resistance is at 108.50) The prospect for a such a scenario is quite high but in order to maintain the current build-up in momentum, USD should not move back below the ‘strong support’ level at 106.60 within these few days.”