USD/JPY remains depressed near 106.00 mark

• USD/JPY remains on the defensive amid a weaker tone surrounding the greenback.
• Doubts about the US fiscal stimulus measures kept the USD bulls on the defensive.
• The risk-on mood undermined the safe-haven JPY and helped limit the downside.

The USD/JPY pair edged lower on the first day of a new week, albeit lacked any strong follow-through and remained confined in a familiar trading range around the 106.00 mark.

A combination of diverging forces failed to provide any meaningful impetus to the pair and led to a subdued/range-bound price moves through the early part of the trading action on Monday. The US dollar remained on the defensive amid doubts over the next round of the US fiscal stimulus measures.

It is worth recalling that the US Senate on Thursday rejected a Republican bill that would have provided around $300 billion in new coronavirus aid. Democrats voted to block the legislation as they have been pushing for more funding to tackle the economic downturn led the coronavirus pandemic.

Apart from this, a weaker tone surrounding the US Treasury bond yields further undermined the already weaker sentiment surrounding the greenback. This, in turn, capped the upside for the USD/JPY pair, instead exerted some pressure, albeit the upbeat market mood helped limit any deeper losses.

News that AstraZeneca resumed its phase-3 trial revived hopes for a coronavirus vaccine and provided a strong lift to the global risk sentiment. The risk-on flow was evident from strong gains across the global equity markets, which, in turn, dented the Japanese yen's perceived safe-haven status.

From a technical perspective, the pair has been oscillating in a range over the past two weeks or so. This makes it prudent to wait for a sustained move in either direction before positioning for any meaningful trading opportunities amid absent relevant market moving economic releases.

Technical levels to watch

USD/JPY