The USD index itself climbed to three-day highs on Thursday amid tepid recovery attempts
USDJPY turned marginally higher on Friday but still stays around local lows registered around 103.65 earlier in the week. The pair remains within a steady bearish trend, struggling to stage a decisive reversal following a modest recovery from March lows seen nearly two weeks ago.
The pair’s behavior could be a sign of lingering uncertainty among investors amid the ongoing coronavirus pandemic and a bleak outlook for economic recovery. The fact that the safe-have yen demand persists at the current levels suggests that market players still prefer a cautious approach due to the persisting risks. Despite the already solid gains, the Japanese currency could extend the ascent in the short-to-medium term as the dollar will likely stay on the defensive.
The USD index itself climbed to three-day highs on Thursday amid tepid recovery attempts following five consecutive sessions of losses. However, the bullish potential still looks limited, with the dollar appeal remaining muted. As the broader focus remains on the downside, the index could suffer extra losses that may bring the price to the monthly low marginally above the 92.00 figure.
From the technical point of view, USDJPY needs to reclaim the 20-DMA as support in order to shrug off the current weakness at least partially. This moving average that arrives at 104.44 today, turned into resistance at the start of the week and continues to act as the key upside target for bulls at this stage.
On the downside, the pair needs to hold above the mentioned lows to avoid fresh losses that will likely be capped by the 103.00 figure. If this level gives up, the 101.20 area will come back into market focus for the first time since March. However, it looks like the pair will refrain from steep losses as the RSI is nearing the oversold conditions in the longer-term timeframes.