USD/JPY climbs to over 1-week tops, 110.00 mark back on sight
• The USD remains supported by Friday’s stellar NFP print/upbeat US ISM PMI.
• Improving risk-sentiment dent JPY’s safe-haven demand and remains supportive.
The USD/JPY pair climbed to over one-week high at the start of a new trading week, with bulls now aiming for a move back towards reclaiming the key 110.00 psychological mark.
Friday's stellar headline NFP print, followed by upbeat US ISM manufacturing PMI eased the post-FOMC bearish pressure surrounding the US Dollar and helped the pair to stage a solid recovery from over two-week lows.
Data released on Friday showed that the US economy created 304,000 jobs in January, the highest in 11 months, though was largely offset by an unexpected rise in the unemployment rate and more importantly, tepid wage growth.
As Omkar Godbole, FXStreet own Analyst explains: “While the labor market is running hot, the wage-price inflation remains anemic, justifying Fed's dovish turn to some extent. The average hourly earnings rose just 0.1% in January, missing estimates. The annual gain of 3.2% matched forecasts.”
However, a solid US ISM manufacturing PMI, coupled with a goodish bounce in the US Treasury bond yields provided a much-needed respite for the USD bulls and prompted some short-covering around the major.
The positive momentum extended through the Asian session on Monday and was further supported by improving risk sentiment, supported by US-China trade optimism and which tends to dampen the JPY's safe-haven status.
Moving ahead, there isn't any major market-moving economic data due for release on Monday and hence, the USD price dynamics/broader market risk sentiment might continue to act as key determinants of the pair's momentum.
Technical outlook
“A weekly close above 109.74 would validate strong dip demand seen around 108.50 and allow a convincing break above 110.00. In a larger scheme of things, a break above 114.55 (October high) is needed to put the bulls back into the driver's seat,” Omkar added further.