USD/JPY holds onto gains, remains below 107.00

• Japanese yen posts mixed results despite risk aversion.

• USD/JPY erases Tuesday’s losses, finds resistance near 107.00.

The USD/JPY pair rose on Wednesday extending the rebound that started on Tuesday from the lowest level in seven weeks near 106.00. It peaked during the American session at 106.97 and it was holding onto daily gains trading at 106.90.

A stronger US dollar was the key driver in Wednesday’s price action. The Japanese yen failed to benefit from a sharp decline in Wall Street and from lower US yields. The Dow Jones was falling almost 3% and the S&P 500 2.70%. The US 10-year yield fell to 0.679%, to test last week's lows.

Usually, amid risk-off environments, the yen tends to rise across the board but on Wednesday it was not the case. A report showing more COVID-19 contagions in the US sparked concerns among investors.

Charles Evans, President of the Federal Reserve Bank of Chicago (currently not a voter at the FOMC) mentioned no one at the central bank is thinking about negative rates and that he would surprise if the Fed goes that way. Evens expected the economy to rebound strongly during the second half of the year. According to him there is space for more fiscal stimulus.

Source: https://tinyurl.com/y87yb2u5

This artice was originally published on fxstreet.com

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