USD / JPY returns to multi-month highs, around the 109.75 zone

• USD / JPY drew some buying on the dips on Monday and was back close to multi-month highs.
• The optimistic US economic outlook continued to prop up the dollar.
• A turnaround in US equity futures, the recovery in US bond yields provide additional momentum.

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

The pair attracted some buying on the dips on the first day of a new trading week and could now be looking to take advantage of its recent strong bullish momentum seen over the last three months or so. The US dollar remained bullish near four-month highs amid 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 decline of the USD / JPY pair.

Investors remained optimistic about the outlook for the US economy amid the impressive pace of vaccination against the coronavirus and the passage of a massive stimulus package. Additionally, United States President Joe Biden made an ambitious promise to administer 200 million vaccine injections in 100 days. Speculation about an additional US $ 3.0 trillion infrastructure spending plan further boosted expectations.

Bullish traders followed the signs of a sudden spike in US Treasury yields. Apart from this, a positive turn in US equity futures undermined the Japanese yen as a safe haven and provided an additional boost to the USD / JPY pair. That said, the slightly overbought RSI on the daily chart could prevent investors from placing aggressive bullish bets amid the absence of relevant economic releases in the US market, however, the emergence of some new purchases at lower levels. favors bullish traders and supports prospects for additional short-term earnings. The USD / JPY pair appears poised to break through an intermediate hurdle near the May 2020 highs, near the 109.85 region and is aiming to regain the key psychological mark of 110.00.

Technical levels