- USD / JPY regains positive traction on Monday and reverses the losses of the previous day.
- The appetite for risk weighs on the Japanese yen and provides a good boost to the pair.
- Rising US bond yields revive demand for the USD and support the pair’s upward move.
The pair USD/JPY clings to its modest intraday gains at the start of the European session on Monday, holding near the upper end of its daily range around the 105.50 level.
A combination of supportive factors has helped the pair regain positive traction on the first day of a new week and has recovered the losses recorded on the previous day. As investors looked beyond Friday’s mixed NFP jobs report, the US dollar is back in demand amid the continuing rise in US Treasury yields Apart from this, market optimism has weighed on demand for the safe-haven Japanese yen and provided a modest boost to the USD / JPY upside.
January’s NFP report has strengthened the case for additional fiscal measures in the United States to support the economy. Expectations for a massive stimulus package in the US have risen further after the US Senate has approved a budget resolution to accelerate the coronavirus aid plan, proposed by President Joe Biden of $ 1.9 billion, to pass without Republican support. This, in turn, has propelled the yield on the US 10-year government bond to nearly a year high and revived demand for the dollar on Monday.
Meanwhile, Progress in vaccination against the coronavirus has further fueled hopes for a strong economic recovery and has continued to boost investor confidence. This has been evident by the underlying bullish sentiment in global stock markets, which in turn has moved money flows away from traditional safe haven assets, such as the JPY. Now it will be interesting to see if the USD / JPY pair can capitalize on the move or continue its struggle to find acceptance above the very important 200-day SMA.
There is no data release from the United States on Monday. That said, news of the US stimulus could continue to influence Treasury yields and USD price dynamics. Investors could follow the signs of the broader market risk sentiment to seize some significant opportunities.
USD / JPY technical levels
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