USD/JPY recovers swiftly from near 2-week lows, retakes 108.00 mark and beyond
- USD/JPY reversed an early dip and rallied around 100-pips from near two-week lows.
- A goodish pickup in the USD demand turned out to be a key factor behind the bounce.
- A mildly positive tone around the US equity futures remained supportive of the move.
The USD/JPY pair climbed to fresh session tops in the last hour, with bulls now looking to extend the momentum further beyond the 108.00 round-figure mark.
The pair managed to find decent support ahead of the 107.00 round-figure mark and for now, seems to have stalled its recent sharp pullback from one-month tops amid a goodish pickup in the US dollar demand.
As investors digested the Fed's unlimited QE, the passage of a massive $2.2 trillion US stimulus package assisted the greenback to halt its week-long downtrend and extended some support to the major.
This coupled with a mildly positive tone around the US equity futures undermined the Japanese yen's perceived safe-haven demand and further contributed to the pair's intraday rally of around 100 pips.
It, however, remains to be seen if the pair is able to capitalize on the move or runs into some fresh supply at higher levels amid mounting fears over the economic fallout from the coronavirus pandemic.
It is worth reporting that the US now has the highest number of new coronavirus cases in the world and raised worries about its impact on the economy, fueling expectations of additional stimulus by the Fed.
This coupled with a prolonged period of uncertainty – amid tightening coronavirus lockdowns across the worlds – might further collaborate towards capping gains, warranting some caution for bullish traders.
In the absence of any major market-moving economic releases, it will be prudent to wait for some strong follow-through buying before positioning for any further near-term appreciating move for the major.
Technical levels to watch