- USD/JPY attracted some dip-buying on Monday and turned positive for the fourth straight day.
- The risk-on mood continued weighing on the safe-haven JPY and extended support to the pair.
- A modest pickup in the USD demand provided an additional boost and remained supportive.
The USD/JPY pair shot to the highest level since July 5 during the first half of the European session, with bulls now eyeing a sustained move beyond the 111.00 mark.
Following an early dip to the 110.55-50 region, the USD/JPY pair caught some fresh bids on the first day of a new trading week and built on last week's solid rebound from the 109.10 support area. This marked the fourth successive day of a positive move and was sponsored by a combination of factors.
The prevalent risk-on mood – as depicted by an extension of a rally in the equity markets – undermined the safe-haven Japanese yen. This, along with a goodish pickup in the US dollar demand, provided and an additional boost to the USD/JPY pair and remained supportive of the ongoing bullish trajectory.
The USD remained well supported by prospects for an early interest rate hike by the Fed. It is worth recalling that the so-called dot plot indicated policymakers' inclination to raise interest rates in 2022. This, to a larger extent, helped offset a modest pullback in the US Treasury bond yields.
Apart from this, the positive momentum could further be attributed to some follow-through technical buying after last week's sustained break through the 110.25-30 supply zone. A subsequent move beyond the previous monthly highs and the 111.00 mark now seems to have set the stage for further gains.
Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders data. This, along with scheduled speeches by a slew of influential FOMC members, might influence the USD price dynamics and produce some trading opportunities around the USD/JPY pair.