USD/JPY reverses a dip to sub-104.00s, still in the red near multi-day lows

The USD/JPY pair remained depressed through the Asian session and dropped to four-day lows, around the 103.90 region, albeit recovered few pips thereafter.

The pair extended this week's retracement slide from the 104.75 region and witnessed some follow-through selling for the second consecutive session on Friday. The downfall also marked the third day of a negative move in the previous four and was sponsored by the prevalent selling bias surrounding the US dollar.

Concerns about the economic fallout from the imposition of new COVID-19 restrictions in several US states resurfaced after an unexpected rise in the US Initial Weekly Jobless Claims. This, in turn, revived hopes for additional US fiscal stimulus from the incoming Biden administrations and continued weighing on the buck.

Apart from this, a fresh leg down in the US Treasury bond yields exerted some additional pressure on the greenback and further contributed to the USD/JPY pair's ongoing slide. However, the optimism over a vaccine for the highly contagious coronavirus disease undermined the safe-haven Japanese yen and helped limit losses.

The USD/JPY pair has managed to rebound around 15 pips from intraday swing lows, though any meaningful recovery still seems elusive. Hence, any subsequent positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly amid absent relevant market-moving economic releases from the US.

Technical levels to watch