USD/JPY jumps to fresh session tops, around mid-109.00s ahead of Powell
- USD/JPY gained strong positive traction on Tuesday and snapped four days of the losing streak.
- A strong pickup in the USD demand was seen as a key factor behind the intraday positive move.
- Bulls seemed unaffected by the prevalent risk-off mood and a further slide in the US bond yields.
The intraday USD buying picked up pace during the early North American session and pushed the USD/JPY pair to fresh daily tops, around the 109.55 region in the last hour.
The pair attract some buying in the vicinity of the 109.00 mark and snapped four consecutive days of the losing streak on Tuesday. The uptick was exclusively sponsored by a goodish pickup in demand for the US dollar, which assisted the USD/JPY pair to stall its recent sharp pullback from over one-month tops.
Investors remain worried that the continuous spread of COVID-19 cases could lead to a global economic slowdown. The market concerns were further fueled by the disappointing US monthly Retail Sales figures. This, in turn, was seen as a key factor that benefitted the greenback's status as the global reserve currency.
On the other hand, the Japanese yen was pressured by an extension of the stage of emergency in Tokyo and seven more prefectures. Bulls largely shrugged off the risk-off impulse in the markets, which tends to drive flows towards the safe-haven JPY, and seemed unaffected by the ongoing decline in the US Treasury bond yields.
The incoming US economic data indicated that the US consumer has grown more cautious in response to the latest surge in COVID-19 cases. This might have forced investors to further scale back their expectations about an early policy tightening by the Fed. Hence, the focus will remain on Fed Chair Jerome Powell's speech.
His remarks will be closely scrutinized for fresh clues about the US central bank's near-term monetary policy outlook. This will play a key role in influencing the USD price dynamics and provide some meaningful impetus to the USD/JPY pair. This makes it prudent to wait for some follow-through buying before placing fresh bullish bets.
Technical levels to watch