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  • USD/JPY attracted some dip-buying on Monday and moved back closer to multi-month tops.
  • The upbeat US economic outlook continued underpinning the USD and remained supportive.
  • A turnaround in the US equity futures, pickup in the US bond yields provide an additional lift.

The USD/JPY pair has managed to rebound around 35 pips from the daily swing highs and was last seen trading just below multi-month tops, around the 109.70-75 region.

The pair attracted some dip-buying on the first day of a new trading week and might now be looking to build on its recent strong bullish momentum witnessed over the past three months or so. The US dollar stood tall near four-month tops amid the prospects for a relatively faster US economic recovery from the pandemic. This was seen as one of the key factors that helped limit the intraday slide for the USD/JPY pair.

Investors remained optimistic about the outlook for the US economy amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package. Adding to this, US President Joe Biden made an ambitious pledge of administering 200 million vaccine shots in 100 days. Further fueling the expectations were speculations for an additional $3.0 trillion infrastructure spending plan from the US.

Bullish traders further took cues from a sudden pickup in the US Treasury bond yields. Apart from this, a positive turnaround in the US equity futures undermined the safe-haven Japanese yen and provide an additional boost to the USD/JPY pair. That said, slightly overbought RSI on the daily chart might hold investors from placing aggressive bullish bets amid absent relevant market moving economic releases from the US.

Nevertheless, the emergence of some fresh buying at lower levels favours bullish traders and supports prospects for additional near-term gains. The USD/JPY pair seems all set to surpass an intermediate hurdle near May 2020 swing highs, around near the 109.85 region and aim to reclaim the key 110.00 psychological mark.

Technical levels to watch