USD/JPY clings to gains near one-week tops, above mid-109.00s

   “¢   Friday’s upbeat NFP report/pickup in the US bond yields remains supportive.
   “¢   Global trade war fears-led USD weakness keeps a lid on any further up-move.

The USD/JPY pair edged higher at the start of a new trading week and touched a one-week high during the Asian session, albeit lacked any strong follow-through.  

The pair consolidated Friday’s strong up-move led by stronger-than-expected US econmic data – monthly jobs report and upbeat ISM manufacturing PMI, which boosted investors’ confidence in the US economy and increased likelihood of another interest rate hike by the Fed at its upcoming meeting on June 13th.  

Market expectations were clearly evident from a follow-through uptick in the US Treasury bond yields and remained supportive of a mildly positive tone surrounding the major.  

This coupled with improving risk-appetite, as depicted by minor gains across equity markets, was seen weighing on the Japanese Yen’s safe-haven appeal and has helped the pair to hold with modest daily gains.  

However, returning global trade war fears, amid expectation of retaliatory measures over the latest US steel and aluminium tariffs, prompted some fresh US Dollar selling and kept a lid on any further up-move.  

In absence of any major market moving economic releases, fresh trade news/developments would drive sentiment surrounding the buck and influence the pair’s momentum on Monday.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair may end up creating a head-and-shoulders pattern with the neckline support of 108.15 if the pair fails to scale the 200-day MA in the next day or two.”

“A daily close below 108.15 would confirm a head-and-shoulders breakdown (a bullish-to-bearish trend change) and would open the doors to 104.90 – target as per the measured height method),” he added further.