USD/JPY struggles to retake 108 pressure by dismal market mood

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  • 10-year US Treasury bond falls more than 3% on Monday.
  • US Dollar Index rebounds toward mid-98s ahead of mid-tier data.
  • Wall Street looks to open the day in the negative territory. 

The USD/JPY pair started the day with a large 50-pip bearish gap as the drone attack on a Saudi oil facility over the weekend caused risk-off flows to take control of the markets. Although the pair staged a recovery during the Asian trading hours, it failed to rise above the 108 mark and was last seen trading at 107.77, losing 0.28% on a daily basis. 

Flight-to-safety dominates as the start of the week

Reflecting the sour market sentiment, the 10-year US Treasury bond yield, which gained more than 20% last week amid rising hopes of the US-China trade conflict coming to an end next month, turned south on Monday and is now down more than 3% keeping the bearish pressure on the positively-correlated USD/JPY pair intact.

Additionally, major European equity indexes are staying in the negative territory on Monday while the S&P 500 Futures is erasing 0.4% to suggest that Wall Street’s main indexes are likely to open lower as well. 

On the other hand, after closing the second straight week with losses, the US Dollar Index is inching higher today and is now up 0.55% on the day at 98.38. Later in the day, the Federal Reserve Bank of New York’s Empire State Manufacturing Index will be the only macroeconomic data release of the day. Investors are, however, likely to remain focused on the market’s risk perception.

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