USD/JPY crawls higher and extends recovery to 105.50 area
- USD/JPY rebound from 105.00 lows on Wednesday, extends to 105.50 so far.
- The dollar appreciates on risk aversion amid COVID-19 fears and downbeat US data.
- USD/JPY: likely to remain between 105.00 and 106.00 over the next weeks – UOB
The greenback has been showing strength against the Japanese Yen on Thursday following the rebound from one-week lows right above 105.00 on Wednesday. The pair has appreciated about 0.6% so far today, to erase Wednesday’s losses and hit session highs near 105.50.
US dollar appreciated on risk aversion
The USD has appreciated across the board on Thursday, buoyed by its safe-haven status. Growing concerns about tightening coronavirus restrictions, as the number of infections increases globally, and the little expectations of a fiscal stimulus deal in the US are keeping investors away from risk.
Furthermore, US macroeconomic data has failed to brighten up the mood. Weekly unemployment claims increased beyond expectations last week, adding evidence that the US labour market is losing strength, while the New York industrial activity disappointed, revealing that the sector is still far from the levels it was before the coronavirus shutdown.
USD/JPY's outlook is mixed – UOB
From a longer-term perspective, the FX Analysis team at UOB sees the pair mixed, likely to remain between 105.00 and 106.00 for the next weeks: “While the bias is tilted to the downside, USD has to close below 104.70 before a sustained decline can be expected. For now, the prospect for such a move is not high but it would increase quickly as long as USD does not move above 105.70 within these few days.”
Technical levels to watch