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  • USD/JPY is clinging to modest daily gains on Monday.
  • Risk aversion helps JPY stay resilient against its rivals. 
  • 10-year US Treasury bond yield is down more than 4%. 

The USD/JPY pair rose to its highest level in five days at 105.06 on Monday but erased a large portion of its daily gains during the American trading hours. As of writing, the pair was up 0.17% on a daily basis at 104.87.

Risk aversion takes markets over

The broad-based USD strength at the start of the week helped USD/JPY push higher. The selling pressure surrounding the major European currencies on concerns over the surging number of coronavirus cases in the continent helped the greenback outperform its rivals. The US Dollar Index, which lost more than 1% last week, staged a decisive rebound and was last up 0.32% on the day at 93.04.

However, with the flight to safety intensifying in the second half of the day, the JPY started to recover its losses. Reflecting the dismal market mood, Wall Street’s main indexes are down between 2% and 2.8% while the 10-year US Treasury bond yield losing 4.6%.

There won’t be any macroeconomic data releases from Japan during the Asian session on Tuesday and the risk perception is likely to remain the primary driver of USD/JPY’s movements.

Later in the day, Durable Goods Orders and the Conference Board’s Consumer Confidence data will be featured in the US economic docket. 

Technical levels to consider