- Deteriorating risk sentiment boosted the safe-haven JPY pressurising USD/JPY.
- Declining US bond yields weighed on the USD adding to the downside pressure
- The move lacks follow-through so aggressive sellers should be cautious
USD/JPY slipped lower in the European session but held above 105.00 a key psychological mark.
The pair has struggled to extend the rebound from 103.00 a multi-month low, and has traded in a narrow range in the past three trading sessions. Fears over the economic impact from rising covid cases is capping recent optimism over a potential COVID-19 vaccine.
The concerns were reflected in a modest decline in the US stock futures, which underpinned demand for the safe-haven Japanese yen putting USD/JP under pressure. Heavy falls in US Treasury bond yields, dragging on the US Dollar, added to the pair’s negative bias.
US consumer inflation figures and Initial Weekly Jobless Claims will be in focus, which together with risk sentiment will drive USD/JPY.