- The USD / JPY fell slightly under the pressure of a risk-free market environment.
- The main European stock market indices suffered heavy losses on Tuesday.
- USD struggles to find demand as investors await FOMC President Powell’s speech.
The USD / JPY pair lost around 50 pips on Tuesday and remained relatively calm near 107.20 in the first half of Wednesday. However, as risk flows began to dominate the financial markets, the JPY strengthened as a safe haven and drove the pair down. At the time of writing, USD / JPY down 0.21% on the day to 106.92.
Earlier in the day, the current index and the eco-observer outlook index, released by the Japanese Cabinet Office, were slightly better than expected, but did not help the JPY.
Investors remain cautious on Wednesday
Increased concerns about a possible second wave of coronavirus seem to weigh on the sentiment. Currently, the German DAX 30 index and the euro The Stoxx 50 index lost 1.22% and 1.35% respectively.
Despite the sour market mood, the USD remains on the back foot for the second day in a row on Tuesday. Prior to FOMC President Powell’s speech on the state of the US economy, the American dollar Index down 0.3% to 99.70.
Previewing Powell’s speech, “he will likely repeat his general commitment to act whenever necessary and that is integrated,” noted FXStreet analyst Yohay Elam. “If he goes into detail and out on new ideas to stimulate the economy and mentions numbers, the dollar could fall and stocks could rise.”