USD/JPY struggles to hold above 108.00, eyes on Wall Street
- USD/JPY is falling for the second straight day on Tuesday.
- JPY gathers strength against its rivals in risk-averse environment.
- Wall Street looks to open in negative territory.
The USD/JPY pair started the week on the back foot and lost more than 100 pips on Monday. The dismal market mood on Tuesday allowed the JPY to continue to outperform its rivals and kept the bearish momentum on the pair intact.
Although USD/JPY recovered a small portion of its daily losses during the European session, it failed to hold above 108.00 and was last seen losing 0.48% on the day at 107.90.
JPY capitalizes on risk-off flows
The data published by the Japan Machine Tool Builders' Association on Tuesday revealed that Machine Tool Orders in May plunged by 52.8% on a yearly basis. Nevertheless, this data was largely ignored by the market participants and risk perception remained as the primary market driver. The World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said that the coronavirus pandemic was "far from over" with a record 136,000 new cases recorded on Monday.
Investors are now waiting for Wall Street's opening bell. Following the impressive risk rally, which carried the Nasdaq Composite to fresh all-time highs, a sharp drop in major US equity indexes could cause the pair to push lower.
Meanwhile, the US Dollar Index failed to hold on to early recovery gains and turned flat near 96.70 in the last hour to make it difficult for USD/JPY to stage a rebound.
The only data featured in the US economic docket will be the IBD/TIPP Economic Optimism Index. On Wednesday, Machina Orders and Producer Price Index (PPI) data from Japan will be looked upon for fresh impetus.
Technical levels to watch for