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  • USD/JPY witnessed some short-covering move on Monday amid receding safe-haven demand.
  • Stronger Chinese PMI prints provided an additional boost to the already upbeat market mood.
  • The prevalent bearish sentiment around the USD might cap gains, at least for the time being.

The USD/JPY pair added to its intraday gains and refreshed daily tops in the last hour, with bulls now eyeing a move back above the 106.00 round-figure mark.

The pair managed to find some support ahead of the key 105.00 psychological mark and witnessed an intraday short-covering move on the first day of a new trading week. The positive move assisted the USD/JPY pair to recover a part of the previous session’s sharp fall from the 107.00 neighbourhood.

The momentum was exclusively sponsored by the upbeat market mood, which tends to undermine demand for the safe-haven Japanese yen. The global risk sentiment got a strong boost on Monday following the release of the better-than-expected Chinese Manufacturing and Services PMI prints for August.

Bullish traders further took cues from a modest pickup in the US Treasury bond yields. However, the prevalent bearish sentiment surrounding the US dollar might hold investors from placing fresh bullish bets and keep a lid on any runaway rally for the USD/JPY pair, at least for the time being.

In the absence of any major market-moving economic releases from the US. This makes it prudent to wait for some strong follow-through buying before positioning for any further intrada appreciating move. Hence, any subsequent strength runs the risk of fizzling out rather quickly.

Technical levels to watch

 

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