USD/JPY climbs above 107 as Wall Street’s main indexes turn positive on the day

• Renewed trade optimism helps market sentiment recover on Monday.
• Wall Street’s main indexes move into the positive territory.
• US Dollar Index fluctuates in a narrow range below the 99 mark.

After spending the majority of the day moving sideways near the 106.80 handle, the USD/JPY pair gained traction during the American trading hours and rose above 107 as the recovering market sentiment made it difficult for the JPY to find demand as a safe-haven. As of writing, the pair was up 0.12% on the day at 107.06.

Trade optimism triggers risk-on flows

Commenting on last week’s reports claiming that the Trump administration was considering the option of putting limits on investors flows into China and delisting Chinese companies from the United States’ (US) stock exchanges, White House economic adviser Larry Kudlow on Monday said that delisting of Chinese companies was not on the table.  

Wall Street’s main indexes, which started the day in the negative territory, turned north and moved into the positive territory on these comments. Additionally, the 10-year US Treasury bond yield extended its rebound and was last up more than 1% on the day to confirm the upbeat mood.

On the other hand, the US Dollar Index continues to move up and down in its daily range below the 99 handle in the absence of significant macroeconomic data releases and keeping the pair’s gains capped for the time being.

In the early trading hours of the Asian session on Tuesday, Labor Cash Earnings and Trade Balance data from Japan, which are unlikely to trigger a sharp response in the pair, will be looked upon for fresh impetus.

Technical levels to watch for