- Sustained USD selling bias failed to assist USD/JPY to preserve its early modest gains.
- The risk-on mood undermined the safe-haven JPY and helped limit losses for the pair.
- The set-up favour of bearish traders and support prospects for further near-term losses.
The USD/JPY pair languished near the lower end of its daily trading range, with bears awaiting some follow-through selling below the 103.00 mark.
The pair failed to capitalize on its Asian session uptick, instead met with some fresh supply near the 103.30 region and dropped to near three-week lows on the first trading day of 2021. The intraday pullback of around 30-35 pips was exclusively sponsored by the prevalent bearish sentiment surrounding the US dollar.
The likelihood of additional US financial aid package and expectations that the Fed will keep interest rates lower for a longer period kept the USD depressed through the first half of the trading action on Monday. However, a combination of factors weighed on the Japanese yen and extended some support to the USD/JPY pair.
