USD/JPY rebounds from multi-week lows, lacks follow-through amid weaker risk sentiment
- USD/JPY managed to find some support near 104.00 mark amid broad-based USD strength.
- The USD stood tall after data showed that the US economy grew 33.1% in July-Sept. quarter.
- A fresh leg down in the equity markets underpinned the safe-haven JPY and capped gains.
The USD/JPY pair managed to rebound around 30 pips from multi-week lows and was last seen trading in the neutral territory, around the 104.30 region.
The pair stalled its intraday slide and witness some intraday short-covering move from the vicinity of September monthly swing lows support, around the 104.00 mark. The US dollar added to its recent strong gains amid growing worries about the potential economic impact of new restrictions to curb the second wave of COVID-19 infections.
The already stronger greenback got an additional boost from stronger-than-expected US GDP report, which showed that the world's largest economy expanded by 33.1% annualized pace during the third quarter of 2020. The upbeat data helped offset the uncertainty about the actual outcome of the US presidential election next week.
Meanwhile, the intraday uptick lacked any strong bullish conviction amid a fresh leg down in the equity markets, which tends to benefit the Japanese yen's relative safe-haven status. This makes it prudent to wait for some strong follow-through buying before confirming that the USD/JPY pair might have bottomed out in the near-term.
Conversely, a convincing breakthrough the 104.00 mark will be seen as a fresh trigger for bearish traders and set the stage for a further near-term depreciating move. The USD/JPY pair might then turn vulnerable to accelerate the slide towards the 103.40-35 intermediate support en-route the next major support near the 103.00 mark.
Technical levels to watch