USD/JPY struggles near mid-108.00s, multi-week lows

The USD/JPY pair edged lower through the first half of the trading action on Monday and dropped to near four-week lows, just below mid-108.00s in the last hour.

The pair came under some renewed selling pressure on the first day of a new trading week and now seems all set to prolong its recent pullback from the vicinity of the 111.00 mark, or one-year tops. This marked the fifth day of a negative move in the previous six and was sponsored by a combination of factors.

Renewed fears about another dangerous wave of coronavirus infections globally took its toll on the global risk sentiment and benefitted the Japanese yen's safe-haven status. Bearish traders further took cues from a softer tone surrounding the US Treasury bond yields and the prevalent US dollar selling bias.

Despite the incoming strong US economic data, investors seem convinced that the Fed will keep interest rates near zero levels for a longer period. This, in turn, dragged the yield on the benchmark 10-year US government bond further away from more than one-year peak of 1.7760% touched in March and weighed on the greenback.

Given last week's sustained weakness below the 109.00 mark, the downtick could further be attributed to some technical selling. A subsequent decline below the 108.40-35 region will be seen as a fresh trigger for bearish traders and pave the way for a further decline amid absent relevant market moving economic releases.

Technical levels to watch