- The USD / JPY is stagnating downward as the US dollar attempts to rebound.
- The rally in equity risk and equity futures is the basis.
- A minor correction cannot be ruled out before the US data.
The USD / JPY consolidates a strong correction from the two-month highs of 108.85, with bears licking wounds around the midpoint of 108.
The spot is currently losing 0.12% to trade at 108.52, after hitting a daily low of 108.43 in the past hour. A downward extension of the corrective mode cannot be excluded locally, given the upsurge following a technical break on Tuesday.
Persistent optimism about the global economic recovery and the resulting rebound in equity risk emerged as the main driver of the recent USD / JPY rebound.
The bullish tale of growth combined with the technical break on the hourly chart contributed to the major breakthrough in long-term trading over two weeks.
However, the pair’s latest decline could likely be linked to the relentless selling seen in the US dollar across the board, as the risk climate lessens the attractiveness of the greenback’s safe haven.
In addition, the yen has made a small offer on reports that the Bank of Japan (BOJ) plans to double financial aid to small businesses affected by the coronavirus pandemic, in conjunction with the USD / JPY drop.
Over the past hour, rates have stabilized amid a lukewarm rebound tempted by the greenback among its main competitors, the US dollar index having returned above 97.50 against new lows of three months at 97.41.
Attention is now turning to US ISM Services PMI and Factory Orders data for other incentives, while risk trends will continue to have a major impact at the moment.
USD / JPY technical levels to watch
On the downside, the next supports are aligned at 108.39 (200-DMA), 108.20 (old resistance) and 108.04 (5-DMA). If the bulls regain their balance, the peaks of two months will be retested en route 109.00 (round number) and 109.14 (R1 classic daily).