The USD/JPY pair extended its strong recovery trend and jumped to fresh one-month high level of 103.53 as recent rhetoric from various Fed officials, including the Fed Chair Janet Yellen's speech at Jackson Hole symposium, fueled speculations of an eventual Fed rate-hike action in the near-future. The greenback witnessed a broad based rally as investors now seemed convinced of an eventual Fed-rate hike action by the end of 2016.
Meanwhile, the Volatility Index (VIX) remained suppressed and is supportive of risk-on sentiment, which provided an additional boost to the major. Moreover, talks of further monetary easing by BoJ has also contributed to the selling pressure surrounding the Japanese Yen and is extending support to the pair's ongoing recovery trend. However, the US and Japanese 10-year Treasury bond yields have failed to provide any directional impetus for the pair.
Investors this week remain focused on the release of one of the most influential macroeconomic release from the US, monthly jobs report for August - popularly known as NFP, which is known for infusing substantial volatility in global financial markets and has the potential to drive the greenback in either direction. Friday's data would be help investors to determine the timing and pace of Fed tightening cycle that would eventually drive the greenback in the near-term.
In the meantime, a sudden spurt in VIX could be the only intrinsic diverging from the ongoing bullish traction and hinder further appreciating move. Until then, the pair seems all set to continue scaling higher and head towards reclaiming 104.00 round figure mark.
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