USD/JPY bulls now eyeing a sustained move beyond 107.00 mark

• USD/JPY finds some support near 106.75-70 region on the first day the week.
• Receding demand for the safe-haven JPY extended some support to the major.
• A weaker tone surrounding the USD might cap any strong gains, at least for now.

The USD/JPY pair was last seen trading near session tops, with bulls now awaiting a sustained move beyond the 107.00 round-figure mark.

Investors initially turned to the safe-haven Japanese yen amid concerns over a surge in new coronavirus infections. In fact, the World Health Organization (WHO) reported a record increase in global coronavirus cases on Sunday and led to some risk-aversion trade during the early part of trading activity on the first day of a new week.

However, a turnaround in the risk-sentiment drove flows away from traditional safe-haven assets and assisted the USD/JPY pair to quickly reverse an early dip to the 106.70-75 region. The pair bounced around 20-25 pips from daily lows, albeit some intraday US dollar weakness held investors from placing any aggressive bullish bets and capped the upside.

Even from a technical perspective, the pair remains well within a broader trading range held over the past three sessions. This makes it prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move for the USD/JPY pair.

Moving ahead, market participants now look forward to a relatively thin US economic docket, which features the only release of Existing Home Sales. The data might influence the USD price dynamics and provide some short-term trading impetus later during the early North American session.

Technical levels to watch