Search ForexCrunch

   “¢   A goodish pickup in the US bond yields largely offset subdued USD price action.
   “¢   Risk-on mood undermines JPY’s safe-haven status and remained supportive.  

The USD/JPY pair broke out of its late Asian session consolidation phase and is now looking to extend the momentum further beyond the 114.00 handle.

A combination of supporting factors helped the pair to build on last week’s strong up-move and continue gaining positive traction for the seventh session in the previous eight.  

With investors looking past Friday’s softer US economic data, bullish traders seemed taking cues from a goodish pickup in the US Treasury bond yields and largely negated a subdued US Dollar price action.  

Adding to this, the Japanese Yen was further weighed down by today’s disappointing release of the Tankan manufacturing and non-manufacturing index for the second quarter of 2018.

Meanwhile, a positive opening across European equity markets dented the Japanese Yen’s safe-haven status and further collaborated to the pair’s goodish up-move to the highest level since early Nov. 2017.  

It would now be interesting to see if the pair is able to continue with its bullish momentum or traders opt to take some profits off the table, especially after the recent upsurge of over 350-pips since early September.

Traders now look forward to today’s economic docket, highlighting the release of ISM manufacturing PMI, for some short-term impetus ahead of this week’s important macroeconomic releases, scheduled at the start of a new month.

Technical levels to watch

Immediate resistance is now pegged near the 114.40 region, above which the pair seems all set to aim towards the key 115.00 psychological mark with some intermediate resistance near the 114.75 area.  

On the flip side, the 113.70-65 region now seems to protect the immediate downside, which if broken might prompt some long-unwinding trade and drag the pair further towards retesting the 113.00 handle.