• USD/JPY was confined in a narrow trading band below the 108.00 mark on Monday.
• Deteriorating risk sentiment benefitted the safe-haven JPY and capped the upside.
• Resurgent USD demand helped offset the negative factor and limit any weakness.

The USD/JPY pair lacked any firm directional bias and oscillated in a narrow trading band, below the 107.00 mark through the Asian session.

A combination of diverging forces failed to provide any meaningful impetus to the pair and led to a subdued/range-bound trading action on the first day of a new trading week.

Fresh US-China tensions over the origin of the coronavirus overshadowed the optimism about the re-opening of economies in some parts of the world and weighed on investors' sentiment.

Adding to this, the US President Donald Trump threatened to impose tariffs on China in retaliation to its cover-up and mishandling of the coronavirus outbreak at the early stage.

A further deterioration in the global risk sentiment was evident from a fresh leg down in the equity markets, which eventually underpinned the Japanese yen's safe-haven demand.

On the other hand, the US dollar was back in demand and benefitted from its status as the global reserve currency amid persistent worries over the economic fallout from the pandemic.

It will now be interesting to see if the pair is able to gain any meaningful traction or remains confined in a range amid absent relevant market-moving US economic releases on Monday.

Moving ahead, this week's important US macro data scheduled at the start of a new month, including the closely watched monthly jobs report (NFP), will be looked upon for a fresh directional impetus.

Technical levels to watch