The mixed tones in risk certainly isn't helping as well

USD/JPY D1 08-04

On Monday, the pair moved higher as dollar gains were accompanied by a more positive risk mood in the market; with the greenback holding its ground against the euro and EM currencies helping somewhat.

Yesterday, the better risk mood initially saw the pair slump as dollar flows were less supportive but also as the risk took a turn for the worse in the latter stages of US trading.

In turn, that saw the pair start off today on a softer note near 108.50 before recouping losses to 109.00 as the dollar firmed and is now settling around 108.75-80.

The shifting risk tones today also isn't really helping as risk went from softer to rallying before the start of European trading, only to slump again after euro area finance ministers failed to reach a bailout deal to battle against the virus fallout.

The technical picture also reflects that as we see price action now get caught between the key daily moving averages at 108.35 and 108.98. There is also further support around the key hourly moving averages at 108.58 and 108.20 respectively.

Those are the key levels to watch in case of any firm directional moves in the pair.

If we are to see the market take a more risk-off turn in the coming sessions, it will once again boil down to how bad the financial situation really is.

If there are distressing signs, the dollar stands to reason to benefit more than the yen. But otherwise, the yen is also a hot pick amid the start of the next wave of selloff in equities.

For now, the technical levels will provide a key guide for how price action will play out. Any topside momentum requires a firm break above the 100-day MA (red line) @ 108.98 with further daily resistance seen from the 50.0 retracement level @ 109.32.

Meanwhile, any downside break needs to get past the key hourly moving averages at 108.58 and 108.20 while also keeping a daily break below the 200-day MA (blue line) @ 108.35.