USD/JPY trades with modest losses, below 108.00 handle

• Mixed trade-related headlines benefitted the JPY’s safe-haven status and exerted some pressure.
• Subdued USD demand does little to impress bulls; stronger Chinese data helped limit the downside.

The USD/JPY pair met with some fresh supply on Monday and extended the previous session's late pullback from over one-week tops - levels beyond the 108.00 round-figure mark.
 
On Friday, reports that the US Administration may now be looking to restrict capital flows into China and to limit Chinese companies from trading on the US exchanges dented investors' appetite for riskier assets. The downbeat mood carried over to the Asian trading session on Monday, which was seen as one of the key factors underpinning the Japanese Yen's safe-haven status and exerting downward pressure on the major.

Weighed down by cautious mood/subdued USD demand

Meanwhile, the US Treasury officials on Saturday denied any plans to do so “at this time,” but also did not rule them out. However, the fact that a Chinese delegation - led by Vice Premier Liu He - will travel to Washington to seek a resolution of the prolonged trade disputes, coupled with slightly better Chinese manufacturing data extended some support and helped limit any deeper losses, at least for the time being.
 
On the other hand, a subdued US Dollar price action - weighed down by the recent political turmoil around the US President Donald Trump’s impeachment and Friday's mixed US economic releases  - did little to influence the pair's momentum or provide any meaningful impetus on the first day of a new trading week.
 
It will now be interesting to see if the pair is able to attract any fresh buying or witness some follow-through pullback amid relatively thin US economic docket - highlighting the only scheduled release of Chicago PMI later during the early North-American session.

Technical levels to watch