- USD/JPY support near 105.4
- The recovery yet to find any follow-through buying, warrants caution
The USD/JPY traded up in the early European session and reposted daily highs, near 105.7, in the later trading.
The pair attracted dip-buying below the 200-hour SMA, just ahead of touching the weekly lows around 105.30 regions, posted in the previous session. The risk-on market mood and a modest US dollar rebound acted against the Japanese Yen.
The pair received an intra-day bounce of 30-35 pips, as short-covering emerged amid extremely oversold conditions in the dollar. The bullishness in the equity markets helped the clawback from lows.
The US dollar strength might not sustain as the worries over the US economic situation are aplenty. Along with the hardened stand exhibited by the Republicans and Democrats on the new relief package, the economic concerns can put pressure on the dollar.
Today’s US economic releases include Initial Weekly Jobless Claims which might cause some action ahead of Friday’s official monthly jobs report, NFP.
Lack of follow-through buying and the anticipation of economic numbers might deter traders from initiating fresh long-positions in the USD/JPY. Yesterday’s high area around 105.85 will act as a resistance for the pair, and if broken, weekly swing highs around 106.45 zone will be in play.