The USD/JPY pair held steady at the start of a new trading week and remained within striking distance of over three-week tops, set last Wednesday.
The pair to extend Friday's strong up-move, supported by stronger than anticipated US monthly jobs report and was being capped by a subdued US Dollar price action, this time backed by a mildly weaker tone around the US Treasury bond yields.
Adding to this, the prevalent cautious tone around global equity markets further underpinned the Japanese Yen's safe-haven appeal and collaborated towards capping the pair near the 113.35-40 supply zone.
Despite a combination of negative factors, the pair has managed to hold above the 113.00 handle and rather took cues from BoJ Governor Haruhiko Kuroda's comments, reaffirming to stick to the current monetary policy stance to achieve the 2% price target.
Meanwhile, investors now seemed reluctant to place any aggressive bets amid the confusion surrounding the US-China trade deal and uncertainty over the outcome of the US mid-term elections.
Hence, it would be prudent to wait for a strong follow-through buying before traders start positioning for any additional near-term positive momentum. In the meantime, today's US economic docket, highlighting the release of ISM non-manufacturing PMI will be looked upon for some short-term trading opportunities.
Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair resumed the rally from the Oct. 26 low of 113.38 on Friday and could soon rise to the recent high of 114.55. The outlook as per the monthly chart is also bullish. So, it seems safe to say that for USD/JPY the path of least resistance is on the higher side.”
“The bullish technical/fundamental setup would be bolstered if Republicans come out on top in both houses. On the other hand, the USD/JPY may invalidate the short-term bullish setup with a move below 112.56 (Friday's low) if elections result in a Democrat majority in both houses, he added further