USD/JPY under pressure around 105.50 despite the US dollar rebound

• US dollar rebound fails to save the day for USD/JPY bulls.
• Sellers continue to lurk above 105.50 despite upbeat mood.
• Holiday-thinned trading could exaggerate the moves.

The minor recovery in the USD/JPY pair met fresh supply just above the 105.60 region, knocking-off the rates back to the midpoint of the 105 level.

The major fails to take advantage of the broad-based US dollar rebound, underpinned by the surge in the USD/CNH cross amid a central bank intervention. Meanwhile, concerns about the coronavirus resurgence across Europe appear to lend some support to the safe-haven US dollar.

The mixed Japanese macro news combined with a rise in the S&P 500 futures could likely cushion the pullback in the spot from daily highs.

Further, the positive sentiment around the US Treasury yields combined with holiday-thinned light trading could likely keep the buyers hopeful while putting them at risk of some exaggeration in the price action.

USD/JPY: Technical levels

“An ascending trend line from September 21, at 105.55 now, challenges the USD/JPY bears targeting the monthly low near 104.95. On the contrary, a downward sloping resistance line from July 01, at 106.05 now, becomes a tough nut to crack for the buyers,” FXStreet’s Analyst Anil Panchal notes.

USD/JPY: Additional levels