USD/JPY clings to strong gains, comfortable above 107.00 handle

   •  Rising US bond yields underpin USD demand.
   •  JPY fails to benefit from the prevalent cautious mood.

The USD/JPY pair held on to its strong gains and now seems to have entered a bullish consolidation phase above the 107.00 handle.

The pair extended its recovery move from 15-month lows, set last Friday, and was supported by a follow-through US Dollar buying interest. A fresh wave of an upsurge in the US Treasury bond yields provided an additional boost to the greenback's ongoing recovery move and was seen as one of the key factors behind the pair's goodish up-move for the third consecutive session.

Meanwhile, the market seems to have largely ignored a sharp turnaround in European equity markets, which did little to revive the Japanese Yen's safe-haven appeal, albeit seemed to keep a lid on the pair's up-move, at least for the time being.

In absence of any major market moving economic releases from the US, broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's movement on Tuesday. 

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet writes: “Technically, the pair has trimmed half of the previous week losses, now losing steam after reaching 107.20, but still holding on to daily gains. In the 4 hours chart, the price remains well below bearish 100 and 200 SMAs, both far above the current level to be relevant short-term, while technical indicators have turned modestly lower, although holding near their daily highs, limiting chances of a directional turnaround. A break below 106.80, however, will hurt the positive tone, and favor additional declines ahead.”