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USD/JPY Struggles Below 106.00 Mark Amid Risk-Off Market Sentiment! 


Today in the European trading session, the USD/JPY currency pair remained depressed for the 2nd-consecutive session & dropped to below its one-week low around the 105.80-75 region. That was mainly due to the risk-off market sentiment, driven by the U.S.-China tussle and Brexit concern, which eventually underpinned the safe-haven Japanese yen and kept the currency pair under pressure.

Also weighing on the market sentiment could be the resurgence of coronavirus cases in the US, which gave extra support to the safe-haven Japanese yen and dragged the currency pair down. On the other hand, the broad-based US dollar strength, supported by its safe-haven status, becomes the key factor that kept the lid on any additional losses in the currency pair.

At this moment, the USD/JPY currency pair is currently trading at 106.13 and consolidating in the range between 105.81 - 106.17. Be it the worrisome headlines concerning the Brexit or the tension between the US-China, not to forget the resurgence of the coronavirus, the market trading sentiment has been flashing red since the day started, which ultimately keeps the safe-haven assets supportive on the day. At the US-China front, the rising tensions between the United States and China continued to pick up the pace.

President Trump earlier imposed punitive measures over the Asian major. As in result, China’s announced new visa restrictions to counter the Trump administration’s action against China. Also fueled the tension could be the fresh headlines suggested that the US is showing readiness to banning some or all products made with cotton from China’s Xinjiang region. Furthermore, President US Trump recently warned to “stand tough against the Dragon Nation” if he is re-elected. This tit-for-tat response from both nations could significantly impact the market trading sentiment.

Additionally, the AstraZeneca confirmed the latest halt in final trials of the coronavirus (COVID-19) vaccine as “routine and voluntary.” Thus, there are approximately 9-drugmakers that recently stepped back from further trials of virus vaccine unless finding the “safe” research results. This eventually exerted downside pressure on the market trading sentiment.

On the contrary, the broad-based US dollar succeeded in maintaining its positive traction and remain bullish on the day amid risk-off sentiment in the market, as well as the gains in the US dollar were further bolstered by the ongoing upsurge in the US Treasury bond yields. Besides supporting the US dollar price, it could mean a major selloff in US stocks.

The U.S. markets witnessed a second rout in tech stocks in less than a week, which underpinned the US dollar. However, the modest gains in the US dollar turned out to be the major factor that capped the pair’s further downside momentum. Whereas, the U.S. Dollar Index, which tracks the greenback against a bucket of other currencies, rose by 0.07% to 93.502 by 10:01 PM ET (3:01 AM GMT).

Looking forward, the market traders will keep their eyes on the USD moves amid the lack of major data/events on the day as well as the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will be key to watch for the fresh direction.

Daily Support and Resistance

S1 105.02

S2 105.54

S3 105.75

Pivot Point 106.06

R1 106.27

R2 106.59

R3 107.11

The USD/JPY bounces off the support level of 105.797 level to trade at 106.160 level. The recent bullish engulfing candle is supporting the upward trend in the market. Continuation of a bullish trend can lead to USD/JPY prices further higher until the 106.450 level. Continuation of an upward trend can lead the USD/JPY prices until the 107.014 level. The RSI is also in support of buying. Therefore, we should look for buying trades over 105.800 level today. Good luck!

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