USD/JPY moves above mid-109.00s, back closer to multi-month high

The USD/JPY pair edged higher on the first day of a new trading week and moved back closer to multi-month tops resistance near the 109.70 region.

Following the previous session's intraday pullback, the pair managed to catch some fresh bids on the first day of a new trading week and was being supported by the prevailing risk-on mood across the global financial markets.

USD/JPY well supported by improving risk sentiment

Against the backdrop of easing geopolitical tensions in the Middle East, optimism over the phase-one US-China trade deal remained supportive of improving risk sentiment and weighed on the Japanese yen's perceived safe-haven status.

This coupled with a modest US dollar uptick remained supportive of the uptick. However, some follow-through weakness in the US Treasury bond yields – weighed down by Friday's weaker US jobs report – might cap further gains.

It is worth recalling that the latest US monthly jobs report showed that the US economy added 145K jobs in December as compared to 164K expected. Moreover, average hourly earnings also fell short of market expectations and came in to show a modest 0.1% during the reported month.

Adding to this, the yearly wage growth rate eased to 2.9% from 3.1% previous and added to the disappointment. The data seemed to have raised prospects of further policy easing by the Fed and was evident from the ongoing fall in the US bond yields.

Hence, the market focus now shifts to other important US macro releases scheduled this week, including the latest consumer inflation figures. This coupled with the US monthly retail sales data might now play a key role in determining the pair's next leg of a directional move.

Technical levels to watch