USD/JPY: Upside attempts remain capped below 105.00 amid light trading

• USD/JPY bulls lack momentum amid the Japanese holiday.
• DXY stalls Friday’s bounce amid vaccine progress.
• US Markit PMIs in focus amid mixed covid narratives.

USD/JPY has bounced-off lows but remains well within Friday’s 20-pips trading range below the 105 level, starting out a fresh week in Asia this Monday.

The major remains divided between two contrasting covid narratives, with half the world going back under lockdowns and stricter restrictions to contain the coronavirus resurgence while on the other side, optimism prevails amid a likely rollout of vaccines in the coming months.

The US dollar index, therefore, remains near the lower end of the recent trading range, undermined by the optimism over the vaccine progress, especially after Moncef Slaoui, Head of the government’s Operation Warp Speed, said that the vaccinations in the US will “hopefully” start in less than three weeks.

Meanwhile, Japanese traders are away, celebrating Thanksgiving Day, which gives the yen market little impetus. However, the renewed uptick in the S&P 500 futures amid vaccine hopes seems to keep the upside limited in the safe-haven yen. The futures tied to the S&P 500 index are up 0.11% on the day, trading above 3,550.

Next of relevance for the spot remains the US Markit Preliminary PMI reports. Meanwhile, the incoming covid updates worldwide will continue to influence the broader market sentiment and eventually the USD/JPY pair.,

USD/JPY technical levels

“Technically, the USD/JPY remains immured in a descending channel that can be stretched back to December 2016, though the much narrower channel from the beginning of July is more relevant for current trading. Support is primarily at 103.30 which marks the bottom on November 6 and the start line for the rally on the 9th. Those were the lowest points since the crash and immediate recovery in March,” FXStreet’s Senior Analyst Joseph Trevisani noted.

USD/JPY additional levels