In the early Monday European session, the USD/JPY currency pair has been moving sideways near the 200-day simple moving average. As selling pressure on the US Dollar persists, it hovers at the mid-134.00s, very close to the four-month low it reached on Friday.

Despite Friday’s vital US monthly jobs statistics, the dollar has been losing ground on speculation that the Fed will defer policy tightening. Dollar weakness versus a broad range of other currencies reflects in the USD Index, which has hit its lowest point since late June. The USD/JPY has been under pressure because BoJ board member Asahi Noguchi has been making hawkish comments as of late.

Any significant gains for the safe-haven JPY are optimism surrounding COVID-19 restrictions loosening in several Chinese cities. The USD/JPY is supported and has limited downside due to the strong sentiment around US Treasury bond yields. Traders are wary of making risky bets on Monday due to the uncertainty in the virtual environment.

The first day’s trading below the 200 DMA since February 2021 may have triggered pessimistic traders on Friday. The absence of buyers and subsequent recovery in the USD/JPY pair lends credence to this gloomy assessment. The major has a path of least resistance that points down, so the recent decline from a 32-year high hit in October is likely to continue.

Investors hope the US economic docket, particularly the ISM Services PMI, will provide a fresh push to the market later in the early North American session. The yield on US government bonds will also have an impact on the value of the dollar.

Conclusion

Risk aversion will have a short-term bearing on the USD/trading JPY’s probabilities.