USD/JPY flirts with session lows, around 104.70 region
- USD/JPY witnessed some selling on Tuesday and extended the overnight pullback from three-day tops.
- The US political uncertainty kept the USD bulls on the defensive and was seen exerting some pressure.
- Coronavirus jitters, the US fiscal impasse benefitted the safe-haven JPY and added to the selling bias.
The USD/JPY pair traded with a negative bias through the Asian session and was last seen hovering near the lower end of its daily trading range, around the 104.75-70 region.
The pair extended the previous day's retracement slide from three-day tops – levels beyond the key 105.00 psychological mark – and remained depressed through the first half of the trading action on Tuesday. Firming market expectations of a strong Democratic victory at the upcoming US elections held the US dollar bulls on the defensive, which, in turn, was seen as a key factor exerting some pressure on the USD/JPY pair.
Meanwhile, growing market worries about the potential economic impact from renewed lockdown measures to curb the ever-rising number of COVID-19 cases weighed on investors' sentiment. This, along with the lack of progress in the US stimulus talks dampened the market mood and further benefitted the Japanese yen's safe-haven status.
From a technical perspective, the USD/JPY pair was now flirting with the lower boundary of a multi-day-old ascending trend-channel. A convincing breakthrough will be seen as a fresh trigger for bearish traders and set the stage for a fall towards September monthly swing lows support, around the 104.00 round-figure mark.
Market participants now look forwards to the US economic docket, highlighting the release of Durable Goods Orders data, for some impetus. Apart from this, the broader market risk sentiment, the US stimulus headlines and developments surrounding the coronavirus saga might further assist traders to grab some short-term opportunities.
Technical levels to watch