“¢ The post-FOMC USD upsurge helps regain positive traction on Monday.
“¢ Reviving safe-haven demand keeps a lid on any strong follow-through.
The USD/JPY pair built on its positive momentum further beyond the 114.00 handle and spiked to fresh one-month tops in the last hour, albeit quickly retreated few pips thereafter.
After Friday’s brief pause, the pair caught some aggressive bids at the start of a new trading week and the strong up-move was fueled by the ongoing US Dollar bullish momentum.
Firming market expectations that the Fed might stick to its gradual monetary policy tightening cycle lifted the USD to fresh 17-month tops on Monday and was seen as one of the key factors driving the pair higher.
The pair touched an intraday high level of 114.21, the highest since Oct. 4, but lacked any strong follow-through amid the prevalent cautious mood around equity markets, which tends to underpin the Japanese Yen’s safe-haven demand.
A combination of factors – US-China trade tensions, Brexit uncertainty and a standoff between Rome and Brussels over Italy’s budget proposals, dented investors’ appetite for riskier assets and was eventually seen capping any further up-move.
In absence of any major market moving economic data in wake of a bank holiday in the US, broader market risk sentiment and the USD price dynamics might continue to play an important role in influencing the pair’s momentum through Monday’s trading session.
Technical levels to watch
Any subsequent retracement is likely to find support near the 113.80 level, below which the pair is likely to accelerate the slide further towards the 113.55-50 region. On the flip side, a sustained move beyond the 114.10-20 area is likely to lift the pair further towards early-October swing highs, around the 114.55 supply zone.
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