USD/JPY holds steady above 105.00 mark, closer to one-week tops

USD/JPY gained traction for the fourth consecutive session on Monday.
The risk-on mood, rallying US bond yields remained supportive of the move.
Sustained USD selling bias might keep a lid on any runaway rally for the pair.

The USD/JPY pair maintained its bid tone through the early European session and was last seen trading near daily tops, above the key 105.00 psychological mark.

The pair gained positive traction for the fourth consecutive session on Monday and is now looking to build on last week’s goodish rebound from monthly lows, around the 104.40 region. The uptick was supported by the underlying bullish sentiment in the financial markets, which tends to undermine demand for the perceived safe-haven Japanese yen.

The progress in the rollout of vaccines for the highly contagious coronavirus disease, along with expectations for a massive US fiscal stimulus plan has been fueling the optimism about a strong global economic recovery. This, in turn, continued boosting investors’ confidence and was evident from an extension of the recent bullish run in the equity markets.

Bullish traders further took cues from the continuous surge in the US Treasury bond yields. In fact, the prospects for the passage of the US President Joe Biden’s $1.9 trillion COVID-19 stimulus package push the yield on the benchmark 10-year government bond beyond the 1.20% for the first time since February 2020 and remained supportive of the positive move.

It, however, remains to be seen if bulls are able to capitalize on the momentum or hold back from placing aggressive bets amid the prevalent selling bias surrounding the US dollar. This makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move for the USD/JPY pair amid absent relevant macro releases.

Technical levels to watch