- USD / JPY extends last week’s retracement slide down for the third consecutive session.
- A softer risk tone benefited the JPY, a safe haven; The Fed’s dovish expectations weighed on the USD.
- The recovery in US bond yields prevented bearish traders from placing new bets and helped limit losses.
The pair USD/JPY it remained depressed during the early North American session, although it has still managed to keep its neck above 109.00.
A combination of factors put some pressure on the pair for the third consecutive session on Monday and dragged it further away from the month-long highs, around the 109.75-80 region established last week. A generally softer risk tone extended some support to the Japanese yen as a safe haven. On the other hand, the US dollar was affected by the moderate expectations of the Fed.
Disappointing monthly US retail sales figures on Friday overshadowed a red-hot consumer inflation report and reaffirmed that the Fed will keep interest rates low for a longer period. This, in turn, was seen as a key factor that continued to act as a headwind for the USD and dragged the USD / JPY pair lower on the first trading day of a new week.
That said, a positive rally in US Treasury yields prevented traders from making aggressive bets and helped limit the slide, at least for now. In the absence of a major market to move the US economic releases, this makes it prudent to wait for some solid follow-up selling before positioning for any further depreciation moves.
Technical levels
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