- USD/JPY remained under some heavy selling pressure for the third straight day on Monday.
- Concerns about rising COVID-19 cases, sliding US bond yields continued undermining the USD.
- Mixed US Durable Goods Orders data did little to ease the heavily offered tone around the USD.
The USD/JPY pair maintained its heavily offered tone through the mid-European session and was last seen trading below mid-105.00s or the lowest level since March 16.
The pair extended last week’s bearish break below the 106.65-60 strong horizontal support and witnessed some strong follow-through selling on the first day of a new trading week. The downfall was led by the prevalent bearish pressure surrounding the US dollar and concerns about worsening US-China relations.
Investors remain worried that the resurgence in coronavirus cases in the United States could undermine the US economic recovery. This coupled with speculations that the Fed would add more stimulus to support the economy exerted some heavy pressure on the USD and was seen as a key factor dragging the USD/JPY pair lower.
On the other hand, the recent escalation of diplomatic tensions between the world’s two largest economies forced investors to take refuge in traditional safe-haven assets. This, in turn, provided an additional boost to the Japanese yen and further collaborated the USD/JPY pair’s bearish slide for the third consecutive session.
The USD remained depressed and failed to gain any respite from Monday’s mixed US Durable Goods Orders data, which showed that headline orders increased by 7.3% in June. The reading was slightly better than 7.2% growth reported in the previous month but marked a sharp deceleration from the previous month’s robust 15.1% rise (revised lower from 15.8%).
It will now be interesting to see if the pair is able to find any support at lower levels or bears aim to challenge the key 105.00 psychological mark, which if broken will set the stage for additional weakness.