- USD/JPY accelerates its reversal beloew 105.00 to reach 104.55 area.
- Theyen appreciates on coronavirus concerns.
- The dollar remains bullish while above 104.40 – UOB.
The USD/JPY has accelerated its downtrend from week highs at 105.65 after breaking below 105.00 on Friday and is attempting to stay above the 104.55/60 area. The greenback is trimming gains after Monday’s rally although still on course to close the week 1.2% higher.
The yen appreciates on COVID-19 converns
The safe-haven Japanese yen has been appreciating across the board over the last two days, fuelled by market concerns about the economic consequences of the second coronavirus wave that is hitting US and Europe. The fast increase of infections and deaths have cooled off the enthusiasm about a potential vaccine.
Furthermore, US Treasury Bond yields, one of the main reasons for the dollar rally, have continued retreating, which has weighed on USD demand. The yield for the 10-year US Treasury note has dropped to 0.88% after having peaked at 0.97% on Wednesday, its highest level since the first pandemic outbreak in March.
USD/JPY remains biased higher while above 104.40 – UOB
The FX Analysis Team at UOBis still bullish about the USD contemplating a retest of 106.10: “As highlighted, there is ‘room for the current strong advance in USD to test the major resistance at 106.10’. At this stage, the odds for a sustained rise above this level are not high. On the downside, a break of 104.40 (‘strong support’ level previously at 104.00) would indicate that USD is not ready for 106.10.”