- USD/JPY witnessed some follow-through selling on the first day of a new week.
- Reviving safe-haven demand underpinned the JPY and exerted some fresh pressure.
- Technical selling below 200-DMA contributed to the slide amid a subdued USD demand.
The USD/JPY pair weakened farther below the 108.00 round-figure mark and dropped to over one-week lows in the last hour.
The pair extended last week’s retracement slide from the 109.40 region and witnessed some follow-through selling for the third consecutive session on Monday – also marking its fourth day of a negative move in the previous five.
The US dollar remained depressed in the wake of the Fed’s announcement last week to provide up to $2.3 trillion of additional loans to support the economy and Friday’s softer-than-expected US consumer inflation figures.
On the other hand, the safe-haven Japanese yen was being supported by persistent worries over the economic fallout from the coronavirus pandemic and got an additional boost in reaction to the rising confirmed cases in China.
China reported the highest number of new daily cases in nearly six weeks and fueled fears about the second wave of COVID-19 outbreak. The same was evident from the risk-off mood in the equity markets, which underpinned demand for traditional safe-haven currencies.
This coupled with possibilities of some technical selling on a sustained weakness back below the very important 200-day SMA further seems to have aggravated the bearish pressure amid relatively thin liquidity conditions.
Most Asain and European markets will remain closed on account of Easter Monday. Hence, developments surrounding the coronavirus saga might continue to influence the broader market risk sentiment and produce some meaningful trading opportunities.
Technical levels to watch