USD/JPY clings to modest daily gains above 108
- Markets remain risk-averse at the start of the week.
- US Dollar Index recovers above 99 area after last week's drop.
- Japan doesn't expect to see an explosive rise in confirmed coronavirus cases.
The USD/JPY pair closed the previous week more than 300 pips lower and staged a modest rebound on Monday boosted by the broad-based USD strength. As of writing, the pair was up 0.2% on the day at 108.10.
DXY starts retracing last week's drop
After suffering heavy losses against its rivals last week, the greenback started the new week on a strong footing with the US Dollar Index (DXY) rebounding above the 99 handle in the early trading hours of the American session. The only data featured in the US economic docket will be the Dallas Fed's Manufacturing Index on Monday.
On the other hand, the dismal market mood helps the safe-haven JPY stay resilient against its rivals and keeps the pair's upside limited for the time being. At the moment, the 10-year US Treasury bond yield is down 3% on the day to reflect the risk-averse environment.
Meanwhile, a member of the Japanese government's coronavirus expert panel noted that there were no signs for an "explosive rise" in the number of confirmed infection in Japan.
In the early trading hours of the Asian session, Unemployment Rate and Industrial Production data from Japan will be looked upon for fresh impetus.
Technical levels to watch for