USD/JPY stuck in a range around 107.00 mark, Powell’s speech awaited
- USD/JPY was seen oscillating in a narrow trading band through the Asian session on Wednesday.
- Concerns about the second wave of virus infections extended some support the safe-haven JPY.
- Negative Fed rate speculations kept the USD bulls on the defensive ahead of Powell’s speech.
The USD/JPY pair lacked any firm directional bias and remained confined in a narrow trading band, just above the 107.00 mark through the early European session.
The US dollar struggled to gain any meaningful traction amid speculations that the Fed might be forced to push interest rates below zero. Bets for negative Fed rates increased further after the US President Donald Trump on Tuesday asked the US central bank to do more policy easing.
However, several FOMC members – including St. Louis Fed President James Bullard and Chicago Fed President Charles Evans – commented against the idea of negative interest rates. Hence, the key focus will be on the Fed Chair Jerome Powell's scheduled speech on the current economic issues.
Investors seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines heading into Wednesday's key event risk. This, in turn, failed to provide any meaningful impetus to the USD/JPY pair and led to subdued/range-bound trading action on Wednesday.
Meanwhile, concerns about the second wave of coronavirus infections continued weighing on investors' sentiment. The was evident from the prevalent cautious mood, which extended some support to the Japanese yen's safe-haven status and seemed to exert some pressure on the major.
Despite the negative factor, the pair has been showing some resilience and thus, warrants some caution for bearish traders. Hence, it will prudent to some follow-through selling before confirming that the recent bounce from multi-week tops might have already run out of the steam.
Conversely, some renewed buying interest might continue to confront some resistance near the 107.70-75 region (overnight swing high). Above the mentioned hurdle, the pair seems all set to aim back towards reclaiming the 108.00 round-figure mark.
Technical levels to watch