- A softer risk tone benefits the safe haven JPY and puts some pressure on the USD / JPY.
- The optimistic US economic outlook supports the dollar and helps limit the decline.
The pair USD/JPY moves with a slight negative bias at the start of the European session on Monday, staying close to the region of 109.60.
The pair has seen some selling on the first day of a new trading week and has returned a part of the positive movement of the previous day to the highest level since June 2020. A pullback in US stock index futures has put pressure on the USD / JPY pair. Bearish traders have also been inspired by a softer tone around US Treasury yields, although the underlying bullish sentiment of the US dollar has helped limit any further losses.
The dollar has been supported by the optimistic US economic outlook, bolstered by the impressive rate of vaccination against coronavirus and the passage of a massive stimulus package. Increasing optimism, on Thursday US President Joe Biden made an ambitious promise to administer 200 million vaccine injections in his first 100 days in office. Speculation about an additional $ 3 trillion infrastructure plan has further supported the prospects for a relatively faster US economic recovery.
Despite the support factor, the overbought conditions on the short-term charts have limited the strong gains of the USD / JPY pair, at least for now. Investors could also refrain from opening aggressive positions, preferring to wait on the sidelines before Friday’s release of the monthly NFP jobs report. Meanwhile, broader market risk sentiment and USD price dynamics could weigh on the pair amid the absence of relevant economic releases in the market.
USD / JPY technical levels
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