- A combination of factors undermined the JPY and helped the USD / JPY gain traction on Monday.
- The bulls did not appear to be affected by the USD’s ongoing slide from multi-month highs.
- Investors are looking for some boost in US PMIs, though the spotlight remains on the Jackson Hole Symposium.
The pair USD/JPY it continued to gain ground during the middle of the European session and rose to new daily highs in the last hour, beyond the psychological level 110.00.
A combination of support factors helped the USD / JPY draw some buying downs near the 109.65 zone on Monday and moving well near last week’s highs. The risk appetite boost undermined the demand for the safe-haven Japanese yen, which was further pressured by the worsening COVID-19 situation in Japan.
Indeed, Japan’s minister in charge of the coronavirus response, Nishimura Yasutoshi, suggested on Sunday that the government could introduce stricter measures to curb infections under current law. This is due to an extension of the state of emergency in Tokyo and 12 other prefectures, which will run until September 12.
Added to this, the weaker August PMI figures for Japan acted as a headwind for the JPY. This, coupled with a good recovery in US Treasury yields, continued to support the offered tone surrounding the USD / JPY pair. The bulls did not appear to be affected by the US dollar’s pullback from a nine-and-a-half-month high.
The uncertainties linked to the COVID-19 situation now appear to have forced investors to re-evaluate the timing of the Fed’s downsizing. This, in turn, was seen as a key factor prompting some profit-taking for the USD. . Therefore, the focus will remain on Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium later this week.
Meanwhile, traders could follow the signs of the release of the US manufacturing and service PMIs, further forward during the early days of the American session. Apart from this, US bond yields could influence USD price dynamics. This, coupled with the broader market risk sentiment, could generate some trading opportunities around the USD / JPY pair.
Technical levels
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