USD/JPY holds steady above mid-107.00s amid notable USD demand
- USD/JPY edged lower during the Asian session on Wednesday amid reviving safe-haven demand.
- A fresh wave of the global risk-aversion trade provided a modest lift to the JPY’s safe-haven status.
- A strong pickup in the USD demand extended some support and helped limit deeper losses, for now.
The USD/JPY pair seesawed between tepid gains/minor losses through the Asian session and is currently placed in the neutral territory, just above mid-107.00s.
The pair extended the previous day's sharp intraday pullback of over 125 pips and witnessed some follow-through weakness through the early part of Wednesday's trading session amid reviving safe-haven demand.
Despite the latest efforts by central banks and governments across the world, concerns over the economic fallout from the coronavirus pandemic continued denting investors' appetite for perceived riskier assets.
This was evident from a fresh leg down in the global equity markets, which provided a goodish lift to the Japanese yen and turned out to be one of the key factors that exerted some pressure on the major.
Bearish traders further took cues from the ongoing slide in the US Treasury bond yields, albeit a goodish pickup in the US dollar demand extended some support and helped limit deeper losses, at least for now.
The greenback regained some positive traction as investors looked past the Fed's latest move to allow foreign central banks to temporarily exchange their holdings of the US Treasuries for dollar loans.
This coupled with mounting fears about an imminent global recession further benefitted the USD's status as the global reserve currency and might hold back investors from placing any aggressive bearish bets.
Hence, it will be prudent to wait for some strong follow-through selling before traders again start positioning for an extension of the pair's recent sharp pullback from one-month tops set last Wednesday.
Technical levels to watch