USD/JPY drifts back closer to session lows, just above 107.00 mark
- USD/JPY struggled to preserve its early gains to 1-1/-week-tops amid renewed USD selling.
- A weaker tone surrounding the US bond yields further contributed to the intraday pullback.
- A modest recovery in the equity markets failed to impress bullish traders or lend any support.
The USD/JPY pair has now drifted back to the lower end of its daily trading range, with bears now awaiting a sustained break below the 107.00 round-figure mark.
The pair failed to capitalize on its Asian session bullish spike to 1-1/2-week tops, instead met with some fresh supply near the 107.55 region amid some a broad-based US dollar weakness. The ever-increasing number of coronavirus cases in the US dampened prospects for a swift recovery for the domestic economy and kept the USD bulls on the defensive.
Bearish traders further took cues from a weaker tone surrounding the US Treasury bond yields, which further contributed to the offered tone surrounding the greenback. Meanwhile, a slight recovery in the global risk sentiment, which tends to undermine the safe-haven Japanese yen, did little to lend any support or provide any meaningful impetus to the USD/JPY pair.
Looking at the technical picture, the pair's inability to capitalize on a move beyond a two-week-old trading range clearly points to persistent selling bias at higher levels. However, it will be prudent to wait for some strong follow-through selling below the 106.65-60 horizontal support before positioning for any further near-term depreciating move.
In the absence of any major market-moving economic releases from the US, the broader risk sentiment will influence demand for the safe-haven JPY. This, along with the USD price dynamics will be looked upon for some short-term trading opportunities.
Technical levels to watch