During Wednesday’s early European session, the USD/JPY currency pair was flashing red and dropped near the mid-107.00 mark mainly due to the latest and modest pullback of the US dollar in the wake of the risk-on market sentiment.

The fresh upticks in the US and Europan equities weakened the Japanese Yen and kept a lid on further losses in the pair. USD/JPY is trading at 107.61 and consolidating between 107.52 and 107.86. However, the US dollar index fell to lows of 100.07 before recovering some ground, still down 0.15% on the day.

The reason behind the risk-on market sentiment is the uptick in the US and European equity futures, which damaged the demand for the greenback. In the meantime, markets ignored the report that the US Senate approved a bipartisan agreement that was reached on $484 billion additional funds for coronavirus.

Apart from the USD, the safe haven Japanese yen continues to find modest support in the wake of more profound losses in oil prices while global economic recession fears from the intensifying coronavirus continue to weigh on the global risk sentiment.

USD/JPY – Support and Resistance 

Support Resistance

107.4 108.02

107.04 108.26

106.42 108.87

Pivot Point 107.65

Technically, USD/JPY is trading with a neutral bias around 107.650, having resistance around the 108 level, which is mostly extended by a downward trendline. The 50 EMA is also keeping the pair in a bearish mode, and we may see prices falling below 108 level. In another case, a bullish breakout of this level can drive buying until 109.12 while support stays at 107.350 and 107.035. Good luck!