- USD/JPY failed to capitalize on the early uptick on Monday.
- Softer USD/US bond yields seemed to exert some pressure.
- US-China Trade optimism might help limit any further slide.
The USD/JPY pair surrendered the early modest gains and has now retreated to the lower end of its Asian session trading range, around the 109.40 region.
Despite the latest trade optimism, the pair failed to capitalize on its attempted positive move to levels just above mid-109.00s and witnessed a modest intraday pullback on the first day of a new trading week.
The US dollar struggled to build on last week’s positive move and was being capped by a weaker tone surrounding the US Treasury bond yields, which turned out to be one of the key factors exerting some pressure.
The downside, however, remained cushioned amid hopes of an interim US-China trade agreement. It is worth recalling that the US President Donald Trump said on Saturday that the US and China would sign their so-called phase one trade pact very shortly.
Meanwhile, a subdued action around global equity markets, which tends to influence the Japanese yen’s perceived safe-haven demand, did little to influence the price action or provide any meaningful impetus.
Hence, it will be prudent to wait for some strong follow-through selling before traders start positioning for any further intraday slide as the focus now shifts to the release of Durable Goods orders data from the US.
Technical levels to watch
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