USD/JPY keeps the red near mid-106.00s

   •  Friday’s dismal US wage growth data continue to weigh on the USD.
   •  Fading safe-haven demand, amid global risk-on trade, helps limit downside.

The USD/JPY pair stalled a late Asian/early European session recovery move and has now dropped back to the lower end of its daily trading range. 

The pair opened with a bearish gap at the start of a new trading week and was being weighed down by a follow-through US Dollar weakness, led by Friday's sluggish wage growth data. 

The pair dropped to an intraday low level of 106.35 before bouncing off lows on improving investors’ appetite for riskier assets - like equities, which was seen denting the Japanese Yen's safe-haven demand. This coupled with a goodish pickup in the US Treasury bond yields did provide a minor boost but was quickly sold in near the 106.75 region. 

Despite a good two-way move, the pair lacked any firm directional bias and was now seen trying to stabilize around mid-106.00s as investors now look forward to this week's important US macro releases for some fresh directional impetus. 

In the meantime, the USD price dynamics and broader market risk sentiment might continue to act as key determinants of the pair's momentum on Monday.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “A break above 107.00 would add credence to bullish RSI divergence, bullish 5-DMA and 10-DMA crossover and breach of the descending trendline and could yield rally to 107.91 (Feb. 21 high). A close higher would expose 109.00-110.00.”

“However, the weekly 10-MA is still trending lower, indicating a bearish setup. So, gains above 108.14 (descending 10-MA) will likely be short-lived. Meanwhile, on the downside, a close below the 10-day moving average (MA) would abort the bullish view.”