USD/JPY trades with modest losses, just below mid-103.00s

• USD/JPY struggled to preserve modest Asian session gains amid sustained USD selling bias.
• The prevalent upbeat market mood undermined the safe-haven JPY and helped limit losses.

The USD/JPY pair retreated nearly 25 pips from the Asian session swing highs and refreshed daily lows, around the 103.40 region in the last hour, albeit lacked follow-through selling.

The pair failed to capitalize on its early uptick on the first day of a new trading week, instead met with some fresh supply near the 103.65 region amid sustained US dollar selling bias. In fact, the key USD Index languished near multi-year lows after the US President Donald Trump signed a $2.3 trillion COVID-19 relief and government funding bill.

This comes on the back of the latest Brexit optimism, which further boosted investors' confidence and remained supportive of a positive trading sentiment around the equity markets. This, in turn, undermined the Japanese yen's perceived safe-haven demand and turned out to be one of the key factors that helped limit the downside for the USD/JPY pair.

Bullish traders further took cues from a goodish pickup in the US Treasury bond yields. Even from a technical perspective, the USD/JPY pair has been oscillating in a range over the past three trading sessions. This further warrants some caution before positioning aggressively for any further near-term depreciating move amid holiday-thinned trading conditions.

There isn't any major market-moving economic data due for release on Monday, suggesting that the USD/JPY pair is more likely to extend its consolidative price action. That said, developments surrounding the coronavirus saga could infuse some volatility in the financial markets and assist traders to grab some short-term opportunities.

Technical levels to watch