USD/JPY remains depressed below 104.00 mark, downside seems limited
|- A softer tone surrounding the USD prompted some selling around USD/JPY on Monday.
- The upbeat market mood, uptick in the US bond yields helped limit any meaningful slide.
The USD/JPY pair remained depressed through the early European session and was last seen hovering near the lower end of its daily trading range, around the 103.70-65 region.
The pair failed to capitalize on the previous session's positive move, instead met with some fresh supply on the first day of a new trading week amid a softer tone surrounding the US dollar. That said, a combination of factors extended some support to the USD/JPY pair and helped limit deeper losses, at least for the time being.
The increasing likelihood of additional US financial aid, to a larger extent, offset worries about the potential economic fallout from the ever-increasing coronavirus cases. This was evident from the underlying bullish sentiment around the equity markets, which tend to undermine demand for the safe-haven Japanese yen.
Meanwhile, expectations for a larger government borrowing and the prevalent risk-on mood pushed the US Treasury bond yields higher. This was seen as another factor that held traders from placing aggressive bearish bets around the USD/JPY pair and makes it prudent to wait for some follow-through selling before positioning for any further decline.
In the absence of any major market-moving economic releases from the US, developments surrounding the coronavirus saga and the US stimulus headlines will play a key role in driving the broader market risk sentiment. This, along with the USD price dynamics might further contribute to produce some short-term trading opportunities around the USD/JPY pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.