USD/JPY moves above 106.00 mark, upside seems limited ahead of Powell's speech
- USD/JPY reverses an early dip to the 105.80 region and moved to session tops.
- The uptick lacked any obvious fundamental catalyst and could fizzle out quickly.
- Investors eye prelim US GDP report for some impetus ahead of Powell’s speech.
The USD/JPY pair recovered around 20 pips from session lows and moved to the top end of its daily trading range, with bulls looking to extend the momentum beyond the 106.00 mark.
The pair managed to find some support near the 105.80 region and for now, seems to have stalled the previous day's retracement slide from the 106.55-60 region, or over one-week tops. The uptick lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly amid a softer risk tone, which tends to underpin the Japanese yen's safe-haven status.
On the other hand, the US dollar remained on the defensive amid expectations for a dovish Fed signals. Hence, the key focus remains on the Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this Thursday. In the meantime, the broader market risk sentiment and the USD price dynamics will be looked upon for some short-term trading opportunities.
Traders might also take cues from the release of the prelim (second estimate) US GDP report for the second quarter of 2020. That said, investors might refrain from placing any aggressive bets ahead of the key event risk. This further makes it prudent to wait for some strong follow-through buying before positioning for any additional intraday gains.
Technical levels to watch