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  • USD/JPY in downside correction after Friday’s volatile trading.
  • The spot divided between weaker DXY, better Japanese data and US stimulus optimism.
  • Traders look to US stimulus and Japan’s virus updates for fresh cues.

USD/JPY has bounced-off lows but remains confined in a narrow range around mid-105s, as markets remain in a wait-and-see mode in the aftermath of Friday’s US NFP report and incoming stimulus headlines.

The major is in a corrective downside mode after spiking to four-month highs of 105.78 on Friday before closing the day in red at 105.36.

The decline in USD/JPY was fuelled by the US dollar sell-off, in the wake of the employment data disappointment, with only 49K jobs added in January while the jobless rate ticked down to 6.3%.

Earlier on Friday, the spot rallied on the US stimulus hopes-led reflation trades and relative strength of the economic recovery.

So far this Monday, markets remain divided over the US stimulus optimism and broad-based US dollar weakness, courtesy of the mixed jobs data.

Meanwhile, the yen traders await a clear decision on the likely lifting of the state of emergency in some areas earlier than previously announced.

Asahi reported that the Japanese government is considering lifting the state of emergency ahead of its scheduled expiry on March 7.

Markets ignored upbeat Japanese current account and trade data, as the focus remains on the US stimulus developments and virus updates from Japan. The US data docket is light this Monday.

USD/JPY technical levels