USD / JPY remains near multi-month lows around the 103.50 level

• Political uncertainty in the US continues to weigh on the USD and limits the initial rally in USD / JPY.
• The cautious sentiment in the market benefits the safe haven JPY and prompts some higher selling.
• The drop remains supported as investors await US political developments and US NFP monthly employment data.

The pair USD/JPY has had difficulty registering a significant recovery and remains near multi-month lows set during the Asian session this Friday, around the 103.35 region.

The pair has not been able to capitalize on its attempted bounce in the Asian session to the 103.75 region and has encountered new selling, falling to the lowest level since March 12. The cautious sentiment has benefited the Japanese yen as a safe haven and limited the rise in the USD / JPY pair.

Meanwhile, the USD has lacked a solid follow-on buy amid the growing likelihood that Democrat Joe Biden would become the next president. However, a victor has yet to be declared and the final result depends on the vote count of a few remaining states on the battlefield. In addition, the US presidential election has dampened hopes for large stimulus packages.

The combination of factors has prevented investors from positioning themselves for big moves in either direction, which in turn appears to be the only factor that, so far, has helped limit deeper losses. USD / JPY remains in a tight range around the 103.50 level, as market participants now await the release of monthly US NFP employment details.

The NFP report, along with US political developments, will influence USD price dynamics. Aside from this, the broader market risk sentiment will also play a key role in driving the USD / JPY pair and could generate some significant trading opportunities on the last day of the week.