- A combination of factors dragged USD/JPY lower for the third consecutive session on Monday.
- Friday’s disappointing US Retail Sales, sliding US bond yields continued undermining the USD.
- Persistent coronavirus jitters benefitted the safe-haven JPY and contributed to the selling bias.
The USD/JPY pair edged lower heading into the European session and dropped to three-day lows, around the 109.15 region in the last hour.
The pair struggled to capitalize on its modest intraday uptick, instead met with some fresh supply near mid-109.00s and has now drifted into the negative territory for the third straight session. Friday's disappointing US Retail Sales figures reaffirmed the Fed's dovish view and kept the US dollar bulls on the defensive. This, in turn, capped the upside for the USD/JPY pair.
In fact, the headline sales remained virtually unchanged during the reported month, marking a sharp deceleration from March's upwardly revised reading of 10.7% (9.8% estimated previously). Adding to this, sales excluding autos decline 0.8% MoM in April, while the closely watched Retail Sales Control Group also fell short of market expectations and came in at -1.5%.
Bearish traders further took cues from the ongoing decline in the US Treasury bond yields, which was seen as another factor that acted as a headwind for the USD. On the other hand, worries over the continuous surge in new coronavirus cases in Asia underpinned the safe-haven Japanese yen and further contributed to the USD/JPY pair's intraday decline back closer to the 109.00 round figure.
There isn't any major market-moving economic data due for release from the US on Monday. Hence, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment will drive demand for the safe-haven JPY and allow traders to grab some short-term opportunities on the first day of a new trading week.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.