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  • USD/JPY continued gaining positive traction for the fourth consecutive session on Monday.
  • Rallying US bond yielding underpinned the USD and remained supportive of the momentum.
  • Overbought RSI might hold bulls from placing fresh bets amid a softer tone around equities.

The strong USD buying remained unabated through the mid-European session and pushed the USD/JPY pair to fresh nine-month tops, around the 106.65-70 region in the last hour.

The pair prolonged its recent strong bullish momentum and gained traction for the fourth consecutive session on the first day of a new trading week. The uptick also marked the ninth day of a positive move in the previous ten and was exclusively sponsored by a broad-based US dollar strength.

The USD climbed to a 3-1/2-month high and remained well supported by the upbeat US economic outlook, reinforced by Friday’s stunning NFP report. Apart from this, a fresh leg up in the US Treasury bond yields further inspired the USD bulls and provided an additional boost to the USD/JPY pair.

The US Senate on Saturday passes a much-awaited $1.9 trillion pandemic relief package and sparked another sell-off in the US fixed income market. This, along with expectations for a possible uptick in US inflation, pushed the yield on the benchmark 10-year US bond back closer to 1.60%.

Meanwhile, the bond market rout raised fears of distressed selling in other asset classes. Adding to this, reports of attacks on Saudi Arabian oil facilities weighed on investors’ sentiment, albeit did little to benefit the safe-haven Japanese yen or hinder the USD/JPY pair’s positive move.

There isn’t any major market-moving economic data due for release from the US on Monday. Moreover, overbought RSI (14) on the daily chart might hold bullish traders from placing fresh bets and keep a lid on any further gains for the USD/JPY pair, at least for the time being.

Technical levels to watch