The USDJPY pair has finally dared to exit its familiar tight trading range. Following yesterday’s dip below the 20-daily moving average that acted as the key short-term support, the dollar accelerated the bearish movement on Friday and plunged to nearly two-week lows around 106.70 in recent trading.
The main driver behind the pair’s bearish shift is the intensifying risk aversion across the global financial markets. Investors continued to express concerns over ongoing coronavirus pandemic as the number of cases in certain countries keeps rising, threatening the recovery process in the global economy. By the way, the United States reported at least 60,565 new coronavirus cases on Thursday, a new record increase, while coronavirus deaths climbed by more than 800 for the third day in a row. Meanwhile, Hong Kong reported the second-highest daily local coronavirus case tally.
The safe-haven demand for the Japanese yen is also supported by the fact that 10-year Treasury yields continue to slip and reached the lowest level since April on Friday. US 30-year yields have also fallen to 1.253%, its lowest level since mid-May.
In another sign of lingering market concerns and heightened uncertainty, the safe-haven gold resumed the ascent and turned positive on the daily timeframes in recent trading. Earlier in the day, the yellow metal retreated to the $1,795 region but managed to attract demand and regained the psychological level despite the overbought conditions.
As for USDJPY itself, the 107.00 handle now turns into resistance, pointing to a further deterioration in the short-term technical picture surrounding the greenback after the recent breakdown. In the near term, the yen could further regain ground if the 106.70 area gives up. Otherwise, a bounce above 107.00 could be expected.
On the upside, the 108.00 level remains the key hurdle for dollar bulls. Also, a significant intermediate resistance arrives around 107.65 where the 100-daily moving average comes. The greenback needs to make a decisive break above this region in order to regain ground and target fresh tops in the medium term.