USD/JPY turns flat around 104.10-15 region, upside seems limited

• A softer risk tone benefitted the safe-haven JPY and exerted some pressure on USD/JPY.
• A combination of factors helped the pair to reverse an intraday dip to sub-104.00 levels.
• US fiscal stimulus hopes might continue to undermine the USD and cap gains for the pair.

The USD/JPY pair seesawed between tepid gains/minor losses through the Asian session and was last seen trading in the neutral territory, around the 104.10-15 region.

The pair failed to capitalize on Friday's goodish intraday positive move and witnessed a modest pullback during the early part of the trading action on the first day of a new trading week. A slight deterioration in the global risk sentiment drove some haven flows towards the Japanese yen, which, in turn, was seen as a key factor exerting some pressure on the USD/JPY pair.

Asian stocks retreated on Monday after Reuters reported that the United States was preparing sanctions on at least a dozen Chinese officials. The move comes on the back of their alleged role in China's disqualification of elected opposition legislators in Hong Kong. However, the optimism over the rollout of a COVID-19 vaccine helped limit the downside for the USD/JPY pair.

The pair quickly reverse an intraday dip to sub-104.00 levels and was further supported by a modest pickup in the US dollar demand. Meanwhile, expectations that the US lawmakers will agree on a new coronavirus relief package should cap the greenback, making it prudent to wait for some follow-through buying before positioning for any further move up for the USD/JPY pair.

There isn't any major market-moving economic data due for release from the US on Monday. Hence, traders are likely to take cues from the broader market risk sentiment and the USD price dynamics. Apart from this, the US stimulus headlines will also be looked upon for some meaningful trading opportunities.

Technical levels to watch