- USD/JPY accelerates its reversal below 105.00 to reach 104.55 area.
- The yen appreciates on coronavirus concerns.
- The dollar remains bullish while above 104.40 – UOB.
The USD/JPY has accelerated its downtrend from week highs at 105.65 after breaking below 105.00 on Friday and is testing support at the 104.55/60 area. The greenback has been giving away gains after Monday’s rally although still 1.2% higher on the week.
The yen appreciates on COVID-19 concerns
The safe-haven Japanese yen has appreciated across the board over the last two days, fuelled by market concerns about the economic consequences of the second coronavirus wave that is hitting the US and Europe. The sharp increase of infections and deaths has cooled off the market's enthusiasm about a potential vaccine seen earlier this week.
Furthermore, US Treasury Bond yields, one of the main reasons behind the dollar rally, have continued retreating, which has weighed on USD demand. The yield for the 10-year US Treasury note has dropped to 0.88% after having peaked at 0.97% on Wednesday, its highest level since the first pandemic outbreak in March.
USD/JPY remains biased higher while above 104.40 – UOB
The FX Analysis Team at UOBis still bullish about the USD contemplating a retest of 106.10: “As highlighted, there is ‘room for the current strong advance in USD to test the major resistance at 106.10’. At this stage, the odds for a sustained rise above this level are not high. On the downside, a break of 104.40 (‘strong support’ level previously at 104.00) would indicate that USD is not ready for 106.10.”
Technical levels to watch
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