USD/JPY falls below 105.50, gives away daily gains
- USD/JPY rejected at 105.75 area, pulls back below 105.00.
- The dollar remains on the defensive with all eyes on the stimulus negotiations.
- USD/JPY expected to remain between 105 and 106.00 for some time.
US dollar’s upside attempt witnessed during the European trading session on Tuesday, lost steam at 105.75, before pulling back during the US trading session and return below 105.50. The pair is now barely changed on daily charts.
US stimulus uncertainty weighs on the dollar
The USD extended its uptrend from last week lows near 105.00 earlier today, despite the weak tone of the USD Index, and managed to hit fresh 7-day highs at 107.75. The positive market sentiment seems to have pressured the safe-haven Japanese yen, rather than the US dollar.
The greenback, however, was unable to maintain its positive tone amid the uncertainty regarding the US coronavirus stimulus negotiations. US House Representative, Nancy Pelosi, has set a deadline on Tuesday, which reduces the odds of reaching an agreement before the Election Day.
USD/JPY expected to remain between 105.00 and 106.00 for some time – UOB
From a technical point of view, the FX Analysis team at UOB expects the USD/JPY to remain moving between 105.00 and 106.00 for the next weeks: “Last Thursday (15 Oct, spot at 105.20), we indicated that USD ‘has to close below 104.70 before a sustained decline can be expected’. USD subsequently traded in a quiet manner and the mild downward pressure has eased. Momentum indicators are mostly neutral and USD could trade between 105.00 and 106.00 for now.”
Technical levels to watch