USD/JPY recovers to 108 area ahead of American session

• Wall Street's main indexes look to open lower on Monday.
• US Dollar Index finds support near 99 mark.
• Trading action is likely to remain subdued on Easter Monday.

The USD/JPY pair closed the previous week virtually unchanged near 108.50 as the upbeat market mood made it difficult for JPY to find demand and allowed the pair to limit its losses despite the broad-based USD weakness.

Markets turn risk-averse on Monday

With the number of coronavirus infections and fatalities globally showing no convincing signs of a slowdown, markets started the new week on a cautious tone and caused the pair to turn south. After dropping to a fresh 10-day low of 107.79 earlier in the day, the pair staged a recovery as the USD seems to be capitalizing on risk-off flows as well. As of writing, the pair was down 0.43% on the day at 108.00.

In the absence of significant macroeconomic data releases on Easter Monday, the risk perception is likely to continue to drive the pair's action. Wall Street's main indexes remain on track to start the day deep in the negative territory with the US stock index futures erasing more than 1% on a daily basis.

Meanwhile, the US Dollar Index, which dropped to a daily low of 99.14, is virtually unchanged near 99.50. 

Technical levels to watch for