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  • USD/JPY failed to capitalize on its early uptick amid the prevalent risk-off environment.
  • Concerns about a surge in new coronavirus cases weighed on investors’ sentiment.
  • The emergence of some fresh USD selling further contributed to the pair’s pullback.

The USD/JPY pair has now retreated to the lower end of its daily trading range, with bears now eyeing a subsequent fall below the 107.00 round-figure mark.

The pair quickly filled a modest weekly bearish gap and climbed to the 107.35-40 supply zone following the release of weaker-than-expected Japanese retail sales figures. The uptick, however, lacked any strong follow-through, rather was quickly sold into amid the prevalent risk-off mood.

Growing worries that a surge in new coronavirus cases could trigger renewed lockdown measures. This, in turn, dampened prospects of a sharp V-shaped global economic recovery and continued weighing on investors’ sentiment, which underpinned demand for the perceived safe-haven Japanese yen.

This comes on the back of the emergence of some fresh selling around the US dollar and further contributed to the USD/JPY pair’s intraday slide. Bulls, however, showed some resilience near the 107.00 round-figure mark, warranting some caution before positioning for any further downfall.

The broader market risk sentiment and the USD price dynamics might continue to act as key drivers of the pair’s momentum on the first day of the week. Later during the early North American session, the release of the US Pending Home Sales will also be looked upon for some trading impetus.

Technical levels to watch