USD/JPY struggles for direction, flat-lined around 103.75-80 region

USD/JPY seesawed between tepid gains/minor losses through the early North American session.
A modest USD uptick extended some support to the pair, weaker sentiment capped the upside.
A sharp intraday slide in the US bond yields, COVID-19 jitters might hold bulls from placing bets.

Haresh Menghani FXStreet

The USD/JPY pair lacked any firm directional bias on Monday and remained confined in a range around the 103.75-80 region through the early North American session.

A combination of diverging forces failed to assist the pair to capitalize on the previous session's positive move, instead led to range-bound price action on the first day of a new trading week. The early downtick to the 103.65 region found some support amid a modest pickup in the US dollar demand.

However, a turnaround in the global risk sentiment – as depicted by a fall in the equity markets – underpinned demand for the safe-haven Japanese yen and capped gains for the USD/JPY pair. The global risk sentiment took a hit following the disappointing release of the German IFO survey results.

The data added to market worries about the potential economic fallout from the continuous surge in new coronavirus cases, the discovery of new variants and a delay in COVID-19 vaccine supplies. In fact, President Joe Biden’s top COVID-19 medical adviser, Dr Anthony Fauci said this Monday that the South African variant poses more threat to vaccine efficacy. Fauci added that existing vaccines might not fight future variants and also raised concerns about delays to second COVID-19 vaccine doses.

Bearish traders further took cues from a steep decline in the US Treasury bond yields, which held the USD bulls from placing aggressive bets. This was also cited as another factor that might contribute towards keeping a lid on any meaningful upside for the USD/JPY pair amid absent relevant macro releases.

Hence, the key focus will remain on the latest FOMC monetary policy update on Wednesday. This will be followed by the Advance US Q4 GDP report on Thursday, which will influence the near-term USD price dynamics. This, in turn, should provide a fresh directional impetus to the USD/JPY pair.

In the meantime, developments surrounding the coronavirus saga will drive the broader market risk sentiment and allow traders to grab some short-term opportunities.

Technical levels to watch

USD/JPY

Overview
Today last price	103.78
Today Daily Change	-0.05
Today Daily Change %	-0.05
Today daily open	103.83

Trends
Daily SMA20	103.58
Daily SMA50	103.82
Daily SMA100	104.51
Daily SMA200	105.71

Levels
Previous Daily High	103.89
Previous Daily Low	103.48
Previous Weekly High	104.09
Previous Weekly Low	103.33
Previous Monthly High	104.75
Previous Monthly Low	102.88
Daily Fibonacci 38.2%	103.73
Daily Fibonacci 61.8%	103.64
Daily Pivot Point S1	103.58
Daily Pivot Point S2	103.33
Daily Pivot Point S3	103.18
Daily Pivot Point R1	103.98
Daily Pivot Point R2	104.14
Daily Pivot Point R3	104.39

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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