USD/JPY flirting with 2-week lows, bears await a sustained break below 107.00 mark
- The prevalent USD selling bias exerted some follow-through pressure on USD/JPY.
- The post-BoJ slide took along some short-term trading stops near 107.35-30 area.
- The risk-on mood, a pickup in the US bond yields might help limit deeper losses.
The USD/JPY pair was seen flirting with daily lows, with bears awaiting some follow-through weakness below the 107.00 round-figure mark.
The pair extended last week's rejection slide from the 108.00-108.10 supply zone and remained under some bearish pressure on the first day of a new week amid some aggressive US dollar selling.
The latest optimism over the reopening of economies worldwide and drug trials for treatments of deadly coronavirus disease weighed heavily the greenback's status as the global reserve currency.
The intraday downfall took along some short-term trading stops near the 107.35-30 horizontal zone and seemed rather unaffected by more stimulus measures announced by the Bank of Japan on Monday.
The BoJ maintained the policy rate at -0.1% and 10y yield target at 0%. The central bank also removed the limit for buying JGBs and increased the purchases of corporate bonds, commercial paper.
Meanwhile, a positive mood around the global equity markets undermined the Japanese yen's safe-haven status and turned out to be a key factor that helped limit any deeper losses for the pair.
The risk-on mood was reinforced by a goodish pickup in the US Treasury bond yields. This coupled with concerns over the economic fallout from the coronavirus pandemic might revive the USD demand.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below monthly swing lows support near the 106.90 region, before positioning for any further depreciating move.
In the absence of any major market-moving economic releases, the broader market risk sentiment and the USD price dynamics might continue to play a key role in influencing the pair's momentum.
Technical levels to watch