USD/JPY remains confined in a narrow range below 104.00 mark

• USD/JPY found some support from reports about the resumption of US fiscal aid talks.
• COVID-19 jitters, dovish Fed expectations, sliding US bond yields weighed on the USD.
• A softer risk tone benefitted the safe-haven JPY and capped the upside for the pair.

The USD/JPY pair extended its sideways consolidative price action through the early North American session and remained confined in a narrow trading band, below the 104.00 mark.

The pair managed to gain some positive traction on the last trading day of the week and for now, seems to have snapped six consecutive days of losing streak. The uptick lacked any obvious fundamental catalyst and could be solely attributed to optimism led by reports that US lawmakers have agreed to resume negotiations on another coronavirus stimulus package.

However, the positive development, to a larger extent, was offset by the US Treasury Secretary Steven Mnuchin's decision to end some of the pandemic relief for struggling businesses. This comes on the back of worries about the potential economic fallout from the continuous surge in new COVID-19 cases, which held the US dollar bulls from placing aggressive bets.

The greenback was also weighed down by growing bets for additional monetary policy easing by the Fed in December and the ongoing decline in the US Treasury bond yields. Apart from this, the prevalent cautious mood around the equity markets extended some support to the safe-haven Japanese yen and contributed towards capping the upside for the USD/JPY pair.

There isn't any major market-moving economic data due for release from the US. That said, developments surrounding the coronavirus saga might continue to influence the broader market risk sentiment. This, along with the USD price dynamics might assist traders to grab some short-term opportunities.

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