USD/JPY Retraces from Highs of More than One Week

The USD/JPY pair has extended its steady intraday retracement from the one-week highs and has fallen to fresh daily lows around the 105.25 regions. At the time of writing, the pair is recovering slightly, although it remains in the negative territory around 105.35.

The USD/JPY has continued its struggles to break out of the 105.50-55 resistance zone and has seen some selling. For now, it appears to have broken four consecutive days of the winning streak. The decline is solely due to a modest reduction in the US dollar. It has not appeared to be affected by a slight improvement in global risk sentiment.

Several factors helped ease market fears about the second wave of coronavirus infections. Renewed hope that the US Congress will agree to the next round of the fiscal stimulus measures remain. This optimism has supported some profit-taking from the US dollar from the two-month highs. Besides, it has put pressure on the USD/JPY pair.

According to the news, the Democrats of the United States House of Representatives are working on a coronavirus stimulus package of 2.2 trillion dollars. The report has boosted investor confidence and sparked a positive rally in stock markets. The monetary flow of risk appetite could weigh on the Japanese yen’s safe-haven demand and limit the deeper losses for the USD/JPY.


The market is awaiting the release of durable goods orders data

A rebound in US Treasury yields has bolstered the improvement in risk sentiment, which could help reignite USD demand and further help limit the USD/JPY decline, at least for the moment.

Market participants are now looking forward to the US economic calendar, highlighting the release of durable goods orders data. The data could influence USD price dynamics and generate some short-term trading opportunities at the start of the American session. Apart from this, the broader market risk sentiment will also be considered to build momentum on the week’s last day.

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