- A combination of factors dragged USD / JPY lower for the third day in a row on Monday.
- Disappointing US retail sales on Friday and falling US bond yields continue to weigh on the dollar.
- Lingering nervousness around the coronavirus benefits the safe-haven JPY and contributes to the selling bias in the pair.
The pair USD/JPY moves lower at the start of the European session on Monday, falling to fresh three-day lows around the 109.15 region. At the time of writing, the pair is recovering slightly from that level and is trading around the 109.25 region.
The pair has struggled to capitalize on its modest intraday rally and found new sales near the region of 109.50, now falling into negative territory for the third day in a row. Disappointing US retail sales figures on Friday reaffirmed the Fed’s pessimistic view and they have kept the US dollar bulls on the defensive. This, in turn, has limited the rise of the USD / JPY pair.
In fact, top sales were virtually unchanged during the reported month, marking a sharp slowdown from the revised upward March figure of 10.7% (previously estimated 9.8%). In addition, sales excluding automobiles decreased 0.8% month-on-month in April, while the Control Group for retail sales also did not meet market expectations and stood at -1.5%.
The pair’s bears have also been inspired by the current pullback in US Treasury yields., which has been seen as another factor that has acted as a headwind for the USD. On the other hand, concerns about the continued rise of new coronavirus cases in Asia have supported the Japanese yen as a safe haven and further contributed to the intraday decline of the USD / JPY pair near the 109.00 round level.
There is no major economic data release from the US on Monday. Therefore, US bond yields will play a key role in influencing USD price dynamics. Aside from this, broader market risk sentiment will boost demand for the safe-haven JPY and could allow investors to seize some short-term opportunities on the first day of a new trading week.
USD / JPY technical levels
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