USD/JPY off lows, still weaker around 110.00 handle
• USD struggles to build on post-NFP gains.
• JPY benefits from global equity selloff.
• US ISM PMI might provide some impetus.
The USD/JPY pair trimmed some of its early losses and has managed to rebound around 20-pips from session lows, touched earlier.
The pair snapped three consecutive days of losing streak and extended its retracement slide from Friday's near two-week tops, around mid-110.00s touched in the aftermath of upbeat US monthly jobs report.
The post-NFP US Dollar rebound lacked any strong follow-through traction and did little to assist the pair to build on last week's strong gains, marking its first weekly advance in the previous four.
Adding to this, the ongoing selloff across global equity markets was seen benefitting the Japanese Yen's safe-haven appeal and further collaborated towards attracting some fresh selling pressure around the major.
Further downside, however, remained limited amid expectations for a pickup in the US inflation this year. Traders now look forward to the US ISM non-manufacturing PMI, due for release later during the early NA session, for some short-term trading opportunities.
In the meantime, broader market risk sentiment and the USD price dynamics would continue to act as key determinants of the pair's movement on the first day of a new trading week.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: “the doors remain open for a test of 110.83. A break above the same could be transient as the equity markets have turned risk-averse in response to rising Treasury yields. So, Yen could find bids. Further, the weekly 5-MA is trending lower, indicating limited scope for a big move on the high side.”
“Further, the spot may slide to 109.49 (23.6% Fib R of 113.39-108.28) if the bulls fail to defend the rising trendline on the 4-hour. Meanwhile, a daily close below the 10-day MA (still trending lower) would mean the technical rally from the Jan. 26 low of 108.28 has ended” he further adds.