USD/JPY struggles near multi-week lows, bears eyeing 104.00 mark
- USD/JPY has now drifted into the negative territory for the third consecutive session on Thursday.
- Concerns about rising COVID-19 cases benefitted the safe-haven JPY and exerted some pressure.
- A modest pickup in the USD demand might help limit deeper losses ahead of the US Q3 GDP print.
The USD/JPY pair extended its steady intraday retracement slide from mid-104.00s and has now dropped back closer to five-week tops set in the previous session.
The pair failed to capitalize on its early uptick, instead met with some fresh supply at higher levels and drifted into the negative territory for the third consecutive session on Thursday. As investors looked past the latest BoJ policy update, the Japanese yen was back in demand amid growing market worries about the ever-increasing coronavirus cases.
It is worth reporting that the JPY weakened a bit during the Asian session after the BoJ lowered its growth and inflation forecasts for fiscal 2020/21 at the conclusion of the October policy meeting. In the post-meeting press conference, the BoJ governor, Haruhiko Kuroda said that the central bank is ready to ease monetary policy without hesitation if needed.
Meanwhile, investors remain concerned that renewed lockdown measures to curb the second wave of the coronavirus infections could derail the tepid global economic recovery. Adding to this, European stock markets pared some of their opening gains, which, in turn, extended some support to the JPY's safe-haven status and prompted fresh selling around the USD/JPY pair.
However, a modest pickup in US dollar demand might help limit any deeper losses, at least for the time being. That said, the uncertain US political environment might hold bulls from placing any fresh bets and cap any attempted recovery for the USD/JPY pair. Hence, a subsequent slide back towards September monthly swing lows, around the 104.00 mark, looks a distinct possibility.
Market participants now look forward to the release of the Advance US Q3 GDP report. Any meaningful divergence from the expected figures will influence the USD price dynamics. This, along with the broader market risk sentiment will be looked upon for some short-term trading opportunities later during the early North American session.
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