USD/JPY clings to modest gains around mid-107.00s, lacks follow-through

• USD/JPY gains some positive traction on Thursday amid receding demand for the safe-haven JPY.
• Positive news about COVID-19 vaccine remained supportive of improving global risk sentiment.
• The prevalent USD selling bias, sliding US bond yields capped gains ahead of the US jobs report.

The USD/JPY pair traded with a mild positive bias through the Asian session, albeit seemed struggling to capitalize on the move beyond mid-107.00s.

Following the previous day's sharp intraday retracement slide from three-week tops, the pair managed to regain some positive traction on Thursday but the uptick lacked any strong follow-through. The positive news related to the development of a vaccine for COVID-19 remained supportive of the positive tone around the equity markets. This, in turn, undermined the safe-have Japanse yen and provided a modest lift to the USD/JPY pair.

It is worth reporting that Biopharmaceutical New Technologies (BioNTech) announced on Wednesday that the COVID-19 vaccine – co-developed with the US pharmaceutical giant Pfizer – has shown potential and triggered a strong immune response in the early stage of human trials.

Despite the upbeat mood, worries about the ever-rising number of coronavirus cases globally held investors from taking a more aggressive risk. This coupled with the prevalent selling bias around the US dollar and sliding US Treasury bond yields kept a lid on any strong gains for the USD/JPY pair. The price action warrants some caution for bulls or positioning for the resumption of the pair's recent recovery move from the 106.00 neighbourhood.

Investors might also refrain from placing fresh bets, rather prefer to wait on the sidelines ahead of Thursday's important release of the closely watched US monthly jobs report. The US economy is expected to have created 3 million jobs in June and the unemployment rate is expected to edge lower to 12.3% from 13.3% previous. The data might provide some short-term trading impetus, though is unlikely to be a major game-changer or help determine the pair's next leg of a directional move.

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