- USD / JPY remains in negative territory on Monday.
- The yield on 10-year US Treasuries is down more than 7%.
- The US Dollar Index clings to daily gains modestly below 93.00.
The pair USD/JPY it came under heavy downward pressure during European business hours and fell to its lowest level in nearly two months at 109.07 on Monday. Although the pair managed to rally early in the US session, it remains in negative territory and was last seen trading at 109.45, shedding 0.6%.
At the beginning of the week, flows of risk aversion allowed the yen – a safe haven – to outperform its rivals. Renewed concerns about the growing number of coronavirus cases crippling the global economic recovery appear to be weighing on market sentiment on Monday. Accentuating the gloomy mood of the market, the major US stock indices are losing between 1% and 2.2%.
Meanwhile, the benchmark 10-year US Treasury yield is shedding more than 7%, making it difficult for USD / JPY to erase its losses.
On the other hand, the dollar also attracts investors as a safer alternative to its risk-sensitive counterparties, especially commodity-linked currencies, and limits the USD / JPY downside for the time being. Currently, the US Dollar Index is up 0.15% to 92.85.
Analysts at TD Securities believe that USD / JPY could extend its decline towards 108.50.
“USD / JPY remains heavy after trading below short-term support around 109.72 tentatively set last week,” analysts explained. “As we look further down, our initial focus is on the MTD lows and the top of the Ichimoku cloud. Both are clustered around the 109.55 mark. Beyond this, we believe that the cloud base ( 109.12) and 108.50 (+/-) zone as the next set of attractors to the downside. “