- USD/JPY up from its multi-month bottom in a relief rally.
- JPY is pressured by upbeat market sentiment.
- USD bulls enthusiasm is missing, lacking strong buyers.
The USD/JPY trades around 103.50-60, hovering near the day’s highs. During the Asian session, the pair showed strength after the recent slide to the lowest level since March 12.
The risk-on demand has made a comeback affecting the demand for the safe-haven Japanese yen and prompted short covering in the pair. The USD/JPY was in the oversold territory before the pullback.
The pro-risk market mood got further emboldened after the election of Joe Biden as the US President. Another major factor driving the risk bulls is the strong Chinese trade balance data published during the weekend.
A split US Congress might force the Fed to give more monetary boost as the coronavirus impact continues without a stop. The US dollar faces pressure from the possibility of a split Congress and Trump’s legal challenges against the election verdict.
The technical picture for the USD/JPY is weak with the bearish breakdown through the descending support triangle around 104.00 area. Hence, follow-up buying has to be seen before confirming a near-term bottoming out in the pair.
At the time of writing, one US dollar buys 103.55 Japanese Yen, slightly up 0.21% as of 9:18 AM UTC.