- USD / JPY saw some selling for the second day in a row on Monday.
- Powell played down speculation for an early rate hike and weighed on the dollar.
- The bears take even more clues from the continuing decline in US Treasury yields.
The pair USD/JPY remains under pressure during the European session on Monday, hovering near three-day lows around the 109.75 region.
The pair has extended Friday’s sharp retracement decline from the 110.25 region, to two-week highs, and moved lower for the second day in a row on Monday. The US dollar has been affected by the decreased odds of an earlier Fed rate hike, which in turn has been seen as a key factor that has put pressure on the USD / JPY pair.
During the long-awaited speech at the Jackson Hole Symposium, Fed Chairman Jerome Powell assured that the US central bank was in no rush to raise interest rates. Powell also warned of downside risks posed the rapid spread of the delta variant, ensuring policymakers carefully evaluate incoming economic data.
The market was quick to react, which was evident by continued decline in US Treasury yields. In fact, the yield on the 10-year US government bond fell back near the 1.30% level during the early part of trading action on Monday. This has weighed further on the USD and added to the selling bias around the USD / JPY pair.
Having said that, underlying bullish sentiment in financial markets has acted as a headwind for the Japanese yen safe-haven and has helped limit any further losses for the USD / JPY pair, at least for now. Market participants are now awaiting the release of pending US home sales data for some boost at the start of the American session today.
However, the key focus will be on this week’s other big macro data scheduled at the start of a new month, including Friday’s monthly US NFP jobs report. Meanwhile, broader market risk sentiment, US bond yields, and price dynamics around the dollar could help investors seize some short-term opportunities.
Technical levels to observe
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