“¢ A follow-through US bond yields upsurge underpinning the USD.
“¢ US-China trade tensions/risk-off mood seemed to cap gains.
The USD/JPY pair struggled to build on its steady intraday climb, albeit remains within striking distance of two-month tops set on Friday.
News that China cancelled its planned trade talks with the US triggered some risk-aversion trade and was seen as one of the key factors behind the pair’s early downtick at the start of a new trading week.
The downside, however, remained cushioned amid a follow-through US Dollar buying interest. The greenback was seen building on Friday’s goodish rebound from over two-month lows and was supported by the ongoing upsurge in the US Treasury bond yields.
Meanwhile, the positive factor, to some extent, was negated by the prevalent weaker trading sentiment around global equity markets, which tends to underpin the Japanese Yen’s safe-haven status and might now collaborate towards capping any meaningful up-move.
There isn’t any major market-moving economic data due for release on Monday and hence, the USD/US bond yield dynamics, coupled with the broader market risk sentiment might continue to act as key determinants of the pair’s momentum.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet explains: “The pair has charted a bull flag pattern – a bullish continuation pattern. A break above 112.63 (resistance/top end of the flag) would signal a continuation of the rally from the Sept. 2 low of 112.04 and allow a rally to 113.46 (target as per the measured height method).”
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