USD/JPY touches fresh multi-month highs above 105.00

• USD/JPY rose above 105.00 for the first time since late November.
• Wall Street’s main indexes are posting strong gains on Monday.
• US Dollar Index remains on track to post its highest daily close since December 14.

The USD/JPY pair continued to push higher during the American trading hours and touched its highest level since November 16 at 105.04. As of writing, the pair was up 0.26% on a daily basis at 104.95.

Risk flows hurt the JPY at the start of the week

The risk-positive market environment and the broad-based USD strength fueled USD/JPY’s climb. Major equity indexes in Europe posted impressive gains on Monday and Wall Street’s opened sharply higher amid renewed hopes for additional fiscal stimulus in the US.

At the moment, the S&P 500 Index is up 1.65% on the day at 3,775, making it difficult for JPY to attract investors as a safe-haven. 

Meanwhile, the greenback continues to gather strength despite the upbeat market mood. Earlier in the day, the data published by the ISM and the IHS Markit both showed that the economic activity in the US manufacturing sector continued to expand at a strong pace in January. Nevertheless, investors largely ignored the macroeconomic data releases and the US Dollar Index now looks to post its highest daily close in more than two months near 91.00.

On Tuesday, there won’t be any significant macroeconomic data releases from Japan and the USD’s market valuation and the risk perception is likely to continue to drive USD/JPY’s movements.

Technical levels to watch for