USD/JPY Price Analysis: Climbs to one-week tops, bulls await a move beyond 200-DMA

• USD/JPY gained strong follow-through traction on the first day of a new trading week.
• The set-up favours bullish traders and supports prospects for a move beyond 200-DMA.
• Only a sustained break below the 104.40 region will negate the near-term bullish bias.

The USD/JPY pair added to its strong intraday gains and jumped to fresh one-week tops, around the 105.40 region during the first half of the European session. The prevalent risk-on environment undermined the safe-haven Japanese yen and was seen as a key factor fueling the momentum.

The USD/JPY pair has now climbed back closer to the very important 200-day SMA, which coincides with a near one-year-old descending trend-line resistance. A sustained breakthrough will be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. This further adds credence to the constructive outlook and supports prospects for an eventual move beyond the mentioned confluence barrier.

Some follow-through buying beyond the monthly swing highs, around the 105.75 region, will reaffirm the bullish bias and push the USD/JPY pair beyond the 106.00 mark. Bulls might then aim towards testing the next relevant resistance marked by September 2020 highs, around the 106.45-55 region.

On the flip side, the key 105.00 psychological mark now becomes immediate strong support to defend. Any subsequent dip might still be seen as a buying opportunity and remain limited. Only a subsequent fall below last week's swing lows, around the 104.40 region will negate the positive outlook.

USD/JPY daily chart

Technical levels to watch