USD/JPY eases from tops, up little around 107.55-60 region
|- USD/JPY regains some positive traction on Monday amid the prevalent upbeat market mood.
- Hopes of a sharp V-shaped global economic recovery remained supportive of the risk-on tone.
- Concerns about risking COVID-19 cases and sustained USD selling capped gains for the major.
The USD/JPY pair trimmed a part of its early gains to three-day tops, albeit has still managed to hold above mid-107.00s through the early European session.
The pair managed to regain some positive traction on the first day of a new trading week and was being supported by the prevalent risk-on mood, which tends to undermine demand for the safe-haven Japanese yen. The global risk sentiment remained well supported by the incoming positive economic data, which has been offering evidence that the worse of the coronavirus pandemic was probably over.
Bulls further took cues from a goodish pickup in the US Treasury bond yields. However, concerns about the continuous surge in the COVID-19 cases across the world held investors from taking excessive risk. Market participants remain worries that the second wave of the coronavirus infections could trigger renewed lockdown measures and put the brakes on economic activity once again.
This coupled with sustained US dollar selling further collaborated towards capping gains for the major, rather prompted some selling at higher levels and led to a modest intraday pullback. Meanwhile, the diverging forces have failed to provide any meaningful impetus to the major, warranting some caution before traders start positioning for the pair's next leg of a directional move.
Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.
Technical levels to watch
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