USD/JPY struggles near daily lows, around 103.75-70 region

• USD/JPY witnessed some selling on Monday amid reviving demand for the safe-haven JPY.
• Concerns about the ever-increasing COVID-19 cases weighing on the global risk sentiment.
• Retreating US bond yields kept the USD bulls on the defensive and added to the selling bias.

The USD/JPY pair held on to its modest intraday losses through the early European session and was last seen hovering near daily lows, around the 103.70 region.

The pair failed to capitalize on its early uptick, instead met with some fresh supply in the vicinity of the 104.00 mark and might now be headed to the lower end of a four-day-old trading range. The prevalent cautious mood benefitted the safe-haven Japanese yen and was seen as a key factor exerting pressure on the USD/JPY pair.

Investors remain concerns about the potential economic fallout from the continuous surge in the number of new COVID-19 cases. The worries were further fueled by Friday’s disappointing US monthly Retail Sales, which, to a larger extent, offset better-than-anticipated Chinese GDP growth figures for the fourth quarter of 2020.

Meanwhile, the risk-off mood led to some follow-through pullback in the US Treasury bond yields. This, in turn, kept the US dollar bulls on the defensive and further contributed to a mildly offered tone surrounding the USD/JPY pair. That said, the lack of any strong follow-through selling warrants some caution for bearish traders.

There isn’t any major market-moving economic data due for release on Monday, leaving the pair at the mercy of the broader market risk sentiment. This further makes it prudent to wait for a sustained weakness below last week’s swing lows, around mid-103.00s, before positioning for any further depreciating move.

Technical levels to watch