USD/JPY remains confined in a range, just above 107.00 mark
- USD/JPY pair seesawed between tepid gains/minor losses through the early North American session.
- Worsening US-China relations benefitted the safe-haven JPY and capped the upside amid weaker USD.
- A positive mood around the equity markets helped limit any deeper losses, at least for the time being.
The USD/JPY pair lacked any firm directional bias and remained confined in a narrow trading band, just above the 107.00 through the early North American session.
A combination of diverging factors failed to assist the pair to build on the previous day's goodish intraday positive move of around 60 pips, instead led to a subdued/range-bound price action on Friday. Concerns over worsening US-China relations kept a lid on the recent optimism over a potential vaccine for the highly contagious coronavirus diseases, which in turn, benefitted the safe-haven Japanese yen.
Bearish traders further took cues from a weaker tone surrounding the US Treasury bond yields. This comes on the back of growing worries that the ever-increasing coronavirus cases could delay the US economic recovery. Adding to this, the impasse over the next round of the US economic stimulus measures further took its toll on the greenback and capped any meaningful upside for the USD/JPY pair.
The bill is expected to be introduced in the Senate as early as this Thursday. Democrats have drawn up plans for as much as $3.5 trillion in fresh spending, while Republicans have dismissed that number as unrealistic. Apart from the developments surrounding the US fiscal plans, the broader market risk sentiment will play a key role in influencing the pair’s momentum on Thursday.
Meanwhile, a modest uptick in the US equity markets extended some support to the USD/JPY pair and helped limit any deeper losses. This makes it prudent to wait for a sustained move in either direction before positioning for any meaningful trading opportunities.
Technical levels to watch