- The USD / JPY witnessed new sales on Thursday in a bear market environment.
- A slight rally in the USD extended support for the pair and helped limit the decline.
- Powell rejected the idea of negative rates and made a small contribution to the greenback.
The USD / JPY The pair fell slightly during the Asian session and was last seen hovering in the lower part of its daily trading range near the region 106.85-80.
The pair failed to capitalize on yesterday’s attempt to resume, but resupplied Thursday and was weighed down by renewed demand for the safe haven Japanese yen. Growing fears about the second wave of coronavirus infections, combined with the loss of hope for a rapid economic recovery, weighed on investor sentiment and manifested in a weaker tone in the equity markets.
Meanwhile, the negative factor, to some extent, has been canceled out by a American dollar the rally, which appeared to be the only factor supporting the USD / JPY pair and could help limit deeper losses, at least for now. The greenback remained well supported by the fact that the Fed President Jerome Powell rejected the idea of negative rates. Powell also said that the economic trajectory remains uncertain and subject to downside risks.
It will now be interesting to see if the pair is capable of attracting buying interest at lower levels or if the current slide marks the end of the recent rebound of several week lows, paving the way for further weakness. Going forward, market participants are now eagerly awaiting the publication of the weekly jobless initial claims in the United States. The data could influence the price dynamics in USD and generate significant opportunities later at the start of the North American session.