USD/JPY clings to gains, eyeing a move beyond 106.00 handle post-US durable goods

• Positive trade-related headlines prompted some aggressive short-covering move on Monday.
• The USD maintains its strong bid tone post-mixed US durable goods and remained supportive.

The USD/JPY pair maintained its strong bid tone, albeit remained below the 106.00 handle post-US durable goods orders data.
 
The incoming positive trade-related headlines led to a sudden turnaround in the global risk sentiment. The same was evident from a goodish up-move in equity markets, which weighed on the Japanese Yen’s safe-haven status and prompted some aggressive short-covering move.

Speaking at the G7 summit in France this Monday, the US President Donald Trump said that he had received two phone calls from Chinese officials over the weekend, urging to reopen trade talks. This comes on the back of earlier comments by China’s Vice Premier Liu He that he wanted to solve the trade differences as calmly as possible.

Upbeat US data adds to positive trade headlines

The intraday uptick was further supported by a goodish pickup in the US Dollar demand and remained supported the latest US macro data, showing that durable goods orders increased 2.1% in July as compared to 1.9% rise recorded in the previous month and 1.1% expected.
 
The upbeat headlines reading, to a larger extent, was negated by weaker core durable goods orders, coming in to show a fall of 0.4% as against a modest 0.1% growth expected and down sharply from the previous month’s downwardly revised reading of 1.0% (1.2% reported previously).
 
It would now be interesting to see if the pair is able to capitalize on the positive momentum or once again meets with some fresh supply at higher levels as market participants keep a close watch on the incoming trade-related headlines, which might continue to act as a key factor driving the broader market risk sentiment and influence the pair’s momentum.

Technical levels to watch