USD / JPY cuts intraday losses to multi-month lows, returns around 103.00

• The risky mood undermined the safe haven JPY and extended some support to USD / JPY.
• The USD remains depressed amid hopes of additional stimulus and dovish expectations from the Fed.
• The bulls may still have to wait for solid purchases to be made before placing new bets.

The pair USD/JPY managed to rally around 30 pips from multi-month lows and was last seen trading modest losses around 103.00.

The pair found some support near the 102.70 region, or the lowest level since March 2020 and, for now, it appears to have stalled its recent bearish trajectory. The underlying bullish sentiment around equity markets undermined the safe-haven Japanese yen and extended some support to the USD / JPY pair.

Despite concerns about the discovery of new variants of the coronavirus, optimism about the launch of vaccines has fueled hopes of a strong global economic recovery in 2021. This, in turn, was seen as one of the key factors that followed. supporting the optimistic mood prevailing in the market.

That said, the sustained sale of US dollars could prevent the bulls from making aggressive bets and limit the rise of the USD / JPY pair. The US dollar remained depressed due to speculation about an additional US financial aid package and expectations that the Fed will keep rates lower for a longer period.

Therefore, the key focus will be on the release of the latest minutes from the FOMC’s monetary policy meeting on Wednesday. This makes it prudent to wait for some solid follow-up buying before confirming that the USD / JPY pair has bottomed out in the near term and positioning for possible additional gains.

Meanwhile, developments around the coronavirus saga and broader market risk sentiment will play a key role in driving demand for the JPY as a safe haven. Apart from this, Monday’s release of the final US Manufacturing PMI could influence USD price dynamics and provide some momentum.

Technical levels