USD/JPY rebounds after sharp fall to 101 area, steadies near 102.30

• S&P 500 drops 7% after opening bell to trigger circuit breaker.
• US 10-year Treasury bond yield is still down more than 30%.
• US Dollar Index struggles to hold above 95.

The USD/JPY pair erased more than 400 pips on Monday and touched its lowest level since September 2016 at 101.18 in the early trading hours of the American session before erasing a portion of its losses. As of writing, the pair was still down 2.9% on the day at 102.30.

Risk-off flows continue to dominate financial markets

The intense flight-to-safety at the start of the week amid heightened concerns over a protracted negative impact of the coronavirus outbreak on the global economy and the beginning of an oil price war allowed the JPY to find demand as a safe-haven. Mirroring the market panic, the 10-year US Treasury bond yield erased more than 40% at one point to register a new all-time low at 0.36%. 

Moreover, the S&P 500 lost 7% minutes after the opening bell to trigger a circuit breaker. Although Wall Street’s main indexes pulled away from lows after trading resumed following a 15-minute break, they are still down between 4.6% and 5.7% on the day.

In the meantime, the greenback continues to suffer heavy losses against its major rivals to force the pair to remain deep in the negative territory. At the moment, the US Dollar Index is down 1.2% on the day at 94.95.

Technical levels to watch for