USD/JPY Falls to Daily Lows Around the 105.50 Zone

The USD/JPY pair has fallen to new daily lows. It reached the 105.50 zone, during the European session on Tuesday and has returned some of the previous day’s strong positive movement.

The pair has continued its struggle to break above the 105.80 resistance zone and witnessed a modest pullback on Tuesday. Cautious sentiment in equity markets benefits demand for the safe-haven Japanese yen, which has been seen as a critical factor that has put some pressure on the USD/JPY pair.

Political uncertainty in the United States ahead of the November 3 presidential election has overshadowed positive news about the return of US President Donald Trump to the White House. Even hopes for a compromise on a new coronavirus fiscal aid package have failed to boost investor sentiment. The DXY index extends its downward movement at the beginning of the week. Although sellers fail to drag it below the 93.30 level.

The bears have followed the signs of a shift in US Treasury yields. Besides, a softer tone around the US dollar has put additional pressure on the USD/JPY. Moreover, it contributed to the intraday pullback of around 25 pips from the daily highs.

Market participants are now waiting for Fed Chairman Jerome Powell’s scheduled speech to generate new momentum to the pair. This, along with broader market risk sentiment, will influence USD/JPY price dynamics. And meanwhile, lead to some trading opportunities amid the absence of relevant macroeconomic data releases.

USD/JPY technical levels

Any subsequent decline is likely to find decent support near the 105.25 region. Below that zone, the USD/JPY pair is expected to pull back to challenge the critical psychological level of 105.00. On the other hand, the 105.75-80 resistance zone could continue to limit the rise. A convincing breakout could lift the pair above the 106.00 level to test the next big obstacle near the 160.25-30 region.