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USD/JPY clings to gains above 111.00 mark, 1-1/2 week tops

4/1/2019, 5:22:24 PMTrading Strategies
USD/JPY clings to gains above 111.00 mark, 1-1/2 week tops

The USD/JPY pair seemed struggling to capitalize on the weekly bullish gap, albeit has managed to hold its neck just above the 111.00 round figure mark. 

The pair built on last week's goodish rebound from multi-week lows and caught some fresh bids at the start of a new trading week amid improving risk sentiment, which tends to dent the Japanese Yen's relative safe-haven status. 

Surprisingly stronger Chinese manufacturing PMI dampened concerns about a slowdown in the world's second-largest economy, which coupled with growing optimism over US-China trade talks boosted investors’ appetite for perceived riskier assets.

The risk-on mood was evident from solid gains across Asian equity markets, which coupled with a strong follow-through upsurge in the US Treasury bond yields provided an additional boost and remained supportive.

However, a mildly weaker tone surrounding the US Dollar failed to inspire the bulls and turned out to be one of the key factors keeping a lid on any meaningful up-move for the major, at least for the time being.

Moving ahead, today's important US macroeconomic releases - monthly retail sales data and ISM manufacturing PMI, will now be looked upon for some fresh trading opportunities later during the early North-American session. 

In the meantime, a combination of diverging forces - strong investors' appetite for riskier assets and some renewed USD weakness, might fail to provide any meaningful impetus and lead to a subdued/range-bound price action.

Technical levels to watch

Immediate resistance is pegged near the 111.40 region, above which the momentum could further get extended towards the 111.70 horizontal resistance before the pair eventually aims to reclaim the 112.00 round figure mark. On the flip side, the 110.85-80 region now seems to protect the immediate downside and is followed by support near mid-110.00s, which if broken might turn the pair vulnerable to aim back towards challenging the key 110.00 psychological mark.