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USD/JPY recovers swiftly from 105.00 neighbourhood, still in the red

  • USD/JPY held weaker through the early North-American session amid the risk-off mood.
  • Tumbling US bond yields undermined the USD demand and added to the selling pressure.
  • Bulls showed some resilience near the key 105.00 psychological mark, at least for now.

The USD/JPY pair maintained its offered tone through the early North-American session, albeit has managed to recover around 100 pips from daily lows.

Having failed to capitalize on its attempted intraday recovery move to mid-107.00s, the added to its weekly bearish gap opening and dropped to fresh session lows in the last hour amid the global flight to safety.

Despite coordinated efforts by major central banks, mounting fears over the coronavirus pandemic continued weighing on investors' sentiment and underpinned the Japanese yen's safe-haven demand.

Apart from the risk-off mood, the Fed's emergency decision to slash interest rates to 0% and restart asset purchases program (QE) triggered a fresh leg of a steep decline in the US Treasury bond yields.

This exerted some heavy downward pressure on the US dollar and contributed to the intraday slide, albeit the pair managed to find some support ahead of the key 105.00 psychological mark.

As investors assessed the Fed's sweeping measures to shore up economic growth, the greenback might benefit from its status as the global reserve currency and provide a modest lift to the major.

Hence, it will be prudent to wait for some strong follow-through selling, possibly below the 105.00 round-figure mark, before traders again start positioning for any further near-term depreciating move.

Technical levels to watch

 

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