USD/JPY remains depressed near multi-week lows, around 108.00 mark

The USD/JPY pair lacked any firm directional bias and seesawed between tepid gains/minor losses, around the 108.00 mark through the first half of the trading action on Thursday.

The pair, so far, has struggled to gain any meaningful traction and remained well within the striking distance of multi-week lows touched earlier this week. Renewed fears about another dangerous wave of coronavirus infections in some countries continued weighing on investors' sentiment and benefitted the safe-haven Japanese yen. This, along with the ongoing decline in the US Treasury bond yields, capped the upside for the USD/JPY pair.

In fact, the yield on the benchmark 10-year US government bond extended its recent sharp pullback from a 14-month peak of 1.78% and was last seen around 1.536%, no far from the lowest level since mid-March. This comes amid expectations that the Fed will keep interest rates near zero levels for a longer period, which kept the US dollar bulls on the defensive and failed to assist the USD/JPY pair to register even a modest recovery.

The negative factors, to a larger extent, were offset by worries about a surge in severe cases of COVID-19 mutant strains in Japan. The fourth wave forced the Japanese government to consider imposing a fresh state of emergency in Tokyo as well as Osaka, Kyoto and Hyogo prefectures on Friday. This, in turn, kept a lid on any meaningful gains for the JPY and seemed to be the only factor that helped limit losses for the USD/JPY pair.

Market participants now look forward to the release of the usual Initial Weekly Jobless Claims data from the US. Apart from this, the US bond yields will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader market risk sentiment for some short-term opportunities.

Technical levels to watch