USD/JPY bulls eyeing a move beyond 107.00 mark, US inflation holds the key

Haresh Menghani FXStreet

• Positive US bond yields underpin USD demand.
• Fading safe-haven demand provides an additional boost.
• Focus remains on the key US consumer inflation figures.

The USD/JPY pair built on its strong rebound from an intraday low level of 106.25 and might now be eyeing a move beyond the 107.00 handle.

In absence of any fresh development, the pair's sharp up-move of nearly 75-pips from the Asian session lows could be attributed to a goodish pickup in the US Dollar demand. With investors looking past Friday's sluggish US wage growth data, a modest uptick in the US Treasury bond yields underpinned the USD and was seen driving the pair higher.

Adding to this, a mildly positive trading sentiment around equity market was seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's strong up-move, back closer to the post-NFP swing highs.

It would now be interesting to see if the pair is able to make it through the key 107.00 handle as traders start repositioning for today's key event risk - the release of latest US inflation figures, which would influence Fed rate hike expectations and eventually provide some fresh directional impetus.

Technical levels to watch

Sustained move beyond the mentioned hurdle is likely to accelerate the up-move towards 107.30-35 intermediate resistance en-route 107.75-80 supply zone. On the flip side, 106.70 level now seems to protect the immediate downside, which if broken might turn the pair vulnerable to head back towards retesting 106.25-20 horizontal support.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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