USD/JPY retreats from 1-1/2-week tops, still comfortable above 107.00 mark
- A combination of factors kept a lid on the USD/JPY pair’s early uptick to 1-1/2-week tops.
- The safe-haven JPY benefitted from the prevalent risk-off mood across the equity markets.
- Concerns over surging COVID-19 in the US undermined the USD and exerted some pressure.
The USD/JPY pair struggled to capitalize on its Asian session bullish spike and has now retreated around 30 pips from 1-1/2-week tops.
A modest pickup in the US dollar demand provided a strong lift and assisted the pair to break out of a near two-week-old trading range on the first day of a new week. However, the USD failed to preserve its early gains, rather witnessed some fresh selling, and kept a lid on any strong move up for the USD/JPY pair.
The second wave of the coronavirus infections the US fueled concerns that the economic recovery will take much longer than initially expected and kept the USD bulls on the defensive. This comes amid a weaker risk sentiment, which undermined the safe-haven Japanese yen and contributed to the USD/JPY pair's pullback.
Nevertheless, the pair has still managed to hold its neck above the 107.00 mark. In the absence of any major market-moving economic releases, the broader market risk sentiment/the USD price dynamics will play a key role in influencing the USD/JPY pair's momentum and produce some short-term trading opportunities.
Technical levels to watch