USD/JPY Continues to Challenge Critical Resistance Near the 105.80 Zone

USD/JPY is witnessing a modest pullback on Tuesday from the 105.75-80 resistance zone. The pair returned some of the previous day’s positive movement. 

USD/JPY continued its struggle to break above the 105.80 resistance zone. 

The prevailing cautious sentiment in equity markets benefited the safe-haven JPY and put pressure on the pair.

A dovish USD demand does little to build momentum ahead of Powell’s speech. 

Political uncertainty in the United States ahead of the November 3 presidential election has dimmed positive news about the return of US President Donald Trump to the White House. Even expectations for a compromise on a new coronavirus financial aid package have failed to support investor sentiment. The DXY index continued its downward movement at the beginning of the week, although sellers could not drag it below the 93.30 level.

The bears have reflected the signs of a shift in US Treasury yields. Additionally, a softer tone around the US dollar has put extra pressure on the USD/JPY and added to the intraday pullback of about 25 pips from the daily highs.

The USD/JPY continues to defy the critical resistance near the region of 105.80. Meanwhile, sentiment around the pair remains mixed amid the widespread decline of the US dollar and the rise in bond yields in the Treasury.

Market sentiment improved on Wednesday after US President Donald Trump called for a partial stimulus, asking lawmakers to approve support for airlines and protect paychecks. Moreover, it will influence USD/JPY price dynamics and provide some trading opportunities amid the absence of relevant macroeconomic data releases.

Economic calendar

Wednesday started quietly on the economic calendar. 

However, from overnight, the markets responded to news of Trump bring to an end stimulus talks. Following his return from the hospital, Trump announced that negotiations should continue after the US Presidential Election.

The announcement came after FED Chairman Powell had called for Congress to approve additional stimulus. Powell had warned that failure to deliver would lead to a slow economic recovery.

All attention now remains on the FOMC meeting minutes for a new direction on pricing on the monetary policy front. Besides the economic calendar, the US president’s health and election talks will be in focus.