- The sustained selling bias of the USD fails to help the USD / JPY capitalize on its initial rally to the 104.55 zone.
- Optimism about the COVID-19 vaccine weighs on the safe-haven JPY and could help limit the pair’s losses.
- Investors focus on initial weekly jobless claims and US ISM services PMI.
The pair USD/JPY is extending its downward move at the start of the European session on Thursday, falling towards the 104.30 / 25 region amid widespread US dollar weakness.
The pair has not been able to capitalize on its initial rise to the 104.55 region and has encountered new selling, extending the previous day’s retracement dip from week-long highs. The bearish pressure around the USD has remained constant during the first half of the trading action on Thursday, which in turn has been considered a key factor putting some pressure on the USD / JPY pair.
The hopes of additional fiscal stimulus measures in the United States to help the economy hit by the pandemic have been revived following the release of the ADP report on Wednesday. According to ADP, the US private sector added 307,000 new jobs in November, up from 410,000 expected, adding to growing market concerns about the economic consequences of the imposition of restrictions due to COVID-19 in several US states.
That said, the latest optimism about the first approval of a vaccine for COVID-19 it has weighed on the safe-haven Japanese yen and could help limit deeper losses for the USD / JPY pair. It is worth remembering that the United Kingdom became the first country on Wednesday to approve a vaccine developed jointly by Pfizer and BioNTech and said it will begin inoculation of those most at risk early next week.
This makes it prudent to wait for a strong continuation sell before confirming that this week’s bounce from the 103.80 region has already been exhausted and the pair is positioned for any further bearish moves. Meanwhile, Thursday’s release of initial weekly jobless claims and US ISM services PMI could generate some opportunities around USD / JPY.
USD / JPY technical levels
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