- USD/JPY regained some positive traction on Monday, though lacked bullish conviction.
- Rebounding US bond yields turned out to be a key factor that extended some support.
- A subdued USD demand might cap gains for the major amid the cautious market mood.
The USD/JPY pair maintained its bid tone heading into the European session and was last seen trading near daily tops, just above mid-113.00s.
The pair attracted some dip-buying on the first day of a new trading week and recovered a major part of Friday's losses to the 113.30-25 horizontal support. Rebounding US Treasury bond yields underpinned the US dollar and turned out to be a key factor that acted as a tailwind for the USD/JPY pair.
The greenback was further supported by the upbeat US NFP report, which showed that the economy created 531K jobs in October. Moreover, figures for the previous two months were also revised higher to show an additional 235,000 jobs, though the Fed's dovish outlook capped the upside for the greenback.
As was widely expected, the US central bank last week announced to lower its monthly asset purchases by $15 billion and reiterated that the inflation is transitory. In the post-meeting press conference, Fed Chair Jerome Powell said that policymakers were in no rush to hike borrowing costs.
Apart from this, a cautious market mood could lend some support to the safe-haven Japanese yen and keep a lid on any runaway rally for the USD/JPY pair, at least for the time being. This, in turn, warrants some caution for bullish traders and positioning for any meaningful appreciating move.
There isn't any major market-moving economic data due for release from the US on Monday, leaving the greenback at the mercy of the US bond yields. Later during the US session, Powell's remarks at an online conference might influence the USD and produce some trading impetus to the USD/JPY pair.