USD/JPY pares early losses, still in the red around 110.00 mark
- USD/JPY met with some fresh supply on the first day of a new week amid broad-based USD weakness.
- Falling US bond yields, risk-off mood benefitted the JPY’s safe-haven status and added to the selling bias.
- The global rush to hoard cash extended some support to the greenback and helped limit deeper losses.
Concerns over a global recession extended some support to the USD’s status as the global reserve currency and helped limit the downside
The USD/JPY pair quickly recovered around 60-65 pips in the last hour and jumped back above the key 110.00 psychological mark, albeit remained in the negative territory.
The pair failed to capitalize on last week's strong positive move and met with some fresh supply on the first day of a new trading week amid some US dollar weakness, weighed down by a combination of factors.
The greenback was weighed down by the US Senate’s failure to pass the COVID-19 rescue package bill and a fresh leg down in the US Treasury bond yields amid sharp losses across the global equity markets.
The risk-off environment provided an additional boost to the Japanese yen's perceived safe-haven status and further contributed to the pair's slide to the 109.67 region, albeit lacked any strong follow-through.
Persistent fears about the economic fallout from the coronavirus pandemic continued lending some support to the greenback's status as the global reserve currency and helped limit deeper losses, at least for now.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the pair might have topped out in the near-term and positioning for any further near-term corrective slide.
Technical levels to watch