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  • USD/JPY remained under some heavy selling pressure for the third straight session on Monday.
  • Concerns about rising coronavirus cases weighed on the USD and kept exerting some pressure.
  • Worsening US-China relations benefitted the safe-haven JPY and further added to the selling bias.

The USD/JPY pair maintained its heavily offered tone through the early European session and slipped below mid-105.00s, hitting the lowest level since mid-March.

The pair extended last week’s bearish break below the 106.65-60 horizontal support and witnessed some aggressive selling for the third consecutive session on Monday. The downfall also marked the fourth day of a negative move in the previous five and was sponsored by sustained selling bias surrounding the US dollar.

The greenback started the week on a downbeat note amid worries that the resurgence in COVID-19 cases in the United States could undermine the recovery in the world’s biggest economy. This, in turn, fueled speculations that the Fed would continue adding more stimulus for a longer period of time and in bigger quantities.

Bearish traders further took cues from sliding US Treasury bond yields. Adding to this, concerns over worsening US-China relations benefitted the Japanese yen’s perceived safe-haven status against its American counterpart. Diplomatic tensions between the world’s two largest economies escalated further last week after both sides ordered the closure of consulates in Houston and Chengdu.

Apart from the mentioned fundamental factors, the ongoing fall could further be attributed to some follow-through technical selling below the 106.00 mark. Meanwhile, oscillators are still holding above the oversold territory and support prospects for a further decline, possibly towards challenging the key 105.00 psychological mark.

Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders later during the early North American session. The data might influence the USD price dynamics, which along with the broader market risk sentiment will be looked upon for some meaningful trading opportunities.

Technical levels to watch