- USD / JPY gained some traction on Friday amid a modest recovery in USD demand.
- Renewed concerns about US-China tensions kept any further gains for the pair at bay.
- US Commerce Secretary Wilbur Ross confirmed the decision to blacklist China’s SMIC.
The pair USD/JPY it trimmed a portion of its intraday recovery gains, though it has still managed to stay in positive territory, around the 103.30-25 region.
The pair gained some positive traction on the last trading day of the week and posted a nice bounce from the nine-month lows, or levels below the 103.00 touched on Thursday. The rally was supported by a modest pickup in demand for the US dollar and underlying bullish sentiment, which tends to undermine safe-haven demand for the Japanese yen.
As negotiators in the US Congress have yet to agree on a new coronavirus relief package, the US dollar saw a rebound in short coverage on Friday. Meanwhile, global risk sentiment remained well supported by the latest optimism about the launch of vaccines for highly contagious coronavirus diseases.
Supporting factors, to a greater extent, were offset by reports that the United States will add dozens of Chinese companies to a trade blacklist. Indeed, US Commerce Secretary Wilbur Ross confirmed that the US has moved to blacklist China’s top chipmaker SMIC, resurfacing concerns about escalating tensions between the two largest economies in the world.
Aside from this, Britain and the European Union took a pessimistic tone about the likelihood of a post-Brexit trade deal. This, in turn, prevented investors from taking aggressive risks and kept strong USD / JPY gains at bay. The lack of subsequent purchases suggests that the short-term downtrend may still be far from over.
There is no major market moving economic data released in the US on Friday. Therefore, the key focus will remain on the US stimulus headlines, which could influence USD price dynamics. This, along with broader market risk sentiment, will also be considered to take advantage of some short-term trading opportunities.
Technical levels
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