USD/JPY bounces off lows, still in red near one-week lows

   •  USD selling reemerges amid weaker US bond yields.
   •  Traders shrug off Kuroda’s dovish comments.
   •  Risk-on mood helps limit further downside.

The USD/JPY pair maintained its offered tone through the early European session, albeit has managed to rebound few pips from one-week lows touched earlier. 

The pair once again failed to sustain/build on early up-move beyond the 107.00 handle and faded a weekly bullish gap, dropping to a one-week low level of 106.38 amid some renewed US Dollar selling bias. 

Investors turned skeptic over possibilities of more than three Fed rate hike moves in 2018 and the same is evident from retracing US Treasury bond yields, which was eventually seen weighing on the greenback. 

However, a positive opening across European bourses, pointing to improving investors' appetite for riskier assets and which tends to weigh on the Japanese Yen's safe-haven demand, helped limit deeper losses, at least for the time being. 

Meanwhile, dovish comments by the BOJ Governor Kuroda, who reinforced the central bank's commitment to super-easy monetary policies until inflation reaches the 2.0% target, also did little to ease the prevailing bearish pressure surrounding the major.

Moving ahead, the key focus would be on the new Fed Chair Jerome Powell's first congressional testimony on Tuesday, which would influence Fed rate hike expectations and eventually help determine the pair's next leg of directional move.

In the meantime, today's release of new home sales data from the US might provide some short-term trading impetus later during the early NA session.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: “The broader outlook remains bearish. The pair looks set to test 102.00-103.00 and could possibly extend the decline to 100.00 this year. A Corrective rally above 108.00 is likely to be short-lived.”