USD/JPY closes in on 106.00 supported by risk flows

• USD/JPY rose to its highest level in five days on Monday.
• Wall Street's main indexes cling to strong daily gains.
• US Dollar Index looks to close in red around mid-93.00s.

The USD/JPY pair gained traction on Monday and rose to its highest level in five days at 105.79. With the market action turning subdued in the American session, the pair seems to have gone into a consolidation phase and was last seen gaining 0.38% on a daily basis at 105.72.

Risk flows hurt JPY on Monday

The risk-on market environment amid easing concerns over US President Donald Trump's health and upbeat macroeconomic data releases booted global stocks and made it difficult for the safe-haven JPY to find demand at the start of the week.

The data published by the IHS Markit and the ISM showed that the economic activity in the US' service sector continued to expand at a strong pace in September. Moreover, the Eurostat reported that Retail Sales in the euro area rose by 4.4% in August to beat the market expectation of 2.4%.  

Reflecting the positive sentiment, Wall Street's main indexes started the day sharply higher and allowed USD/JPY to preserve its bullish momentum. At the moment, the S&P 500 and the Dow Jones Industrial Average both gain around 1.4% on the day. 

On the other hand, the greenback remains on the back foot on Monday and limit's the pair's upside for the time being. As of writing, the US Dollar Index is down 0.38% on the day at 93.45 and remains on track to close in the negative territory for the fifth time in the last six trading days.

Technical levels to watch for