USD/JPY struggles near 1-month lows, around 106.20 region
- USD/JPY remained under some heavy selling pressure for the second straight session on Friday.
- The risk-off mood benefitted the safe-haven JPY and was seen as a key factor exerting pressure.
- The USD struggled near 22-month lows and did little to assist the pair to register any recovery.
The USD/JPY pair maintained its heavily offered tone through the early North American session and was last seen hovering around one-month lows, near the 106.25-20 region.
The pair added to the previous day's losses and witnessed some strong follow-through selling for the second consecutive session on Friday. The downtick marked the third day of a negative move in the previous four and was sponsored by a strong pickup in demand for the safe-haven Japanese yen.
The recent escalation of diplomatic tensions between the world's two largest economies added to the coronavirus-induced economic uncertainty. This, in turn, took its toll on the global risk sentiment and forced investors to take refuge in traditional safe-haven assets.
On the other hand, the US dollar remained depressed near 22-month lows amid worries that a resurgence in coronavirus cases could delay the economic recovery. This coupled with a fresh leg down in the US Treasury bond yields further undermined the greenback demand.
Apart from this, possibilities of some trading stops being triggered below the 106.65-60 horizontal support aggravated the intraday bearish pressure. Bears might now wait for a sustained break below June monthly swing lows support, around the 106.00 mark, before placing fresh bets.
Market participants now look forward to the US economic docket, highlighting the release of the flash version of PMI prints for July. This, along with the broader market risk sentiment might assist traders to grab some meaningful opportunities on the last day of the week.
Technical levels to watch