“¢ The bullish move seems unaffected by softer USD/US bond yields.
“¢ Improving risk-appetite/fading safe-haven demand remains supportive.
The USD/JPY pair held on to its modest daily gains near six week tops and might now be looking to build on the momentum beyond the 111.00 handle.
The pair built on last week’s goodish rebound from 55-day SMA support, near the 109.40-35 region, and continued gaining traction for the sixth consecutive session. The bullish move remains unaffected by a mildly softer tone surrounding the US Dollar and flattening of the US yield curve.
In fact, the spread between the US 10-year treasury yield and the 2-year treasury yield now stands at the lowest level since 2007 amid growing worries that a global trade war would slow inflation and business activity worldwide, which now seemed to cap any follow-through bullish move.
Meanwhile, a slight improvement in investors’ appetite for riskier assets, as depicted by a positive trading sentiment around equity markets, was seen weighing on the Japanese Yen’s perceived safe-haven appeal and eventually driving the pair higher.
It, however, remains to be seen if bulls are able to maintain their dominant position or opt to lighten their bets, especially after the recent upsurge over the past one-week or so and ahead of this week’s heavyweight US economic data, including the keenly watched monthly jobs report (NFP).
Technical levels to watch
On a sustained move beyond the 111.00 mark, the pair is likely to aim towards testing May monthly highs, around the 111.40 region, before eventually darting towards the 111.95-112.00 supply zone. On the flip side, the 110.80-75 region now seems to protect the immediate downside, below which the pair is likely to slide back towards the 110.35-30 horizontal support.
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