USD/JPY hovering around 113.00 handle ahead of US ISM

The USD/JPY pair continued gaining traction through early NA session on Monday and has now jumped beyond the 113.00 handle to the highest level since May 17.

Having witnessed a bearish weekly gap opening, the pair quickly regained traction and resumed with its well-established uptrend over the past three weeks after upbeat Chinese manufacturing PMI, which triggered a fresh wave of global risk-on trade. The same is being reflected by a strong rally in global equity markets, which was seen weighing on the Japanese Yen's safe-haven appeal and remained supportive of the pair's strong upsurge beyond the key 113.00 handle.

Moreover, the pair built on its recent strong up-move from sub-109.00s level touched during mid-June and today's strong up-move has been primarily driven by a goodish US Dollar recovery, led by the recent upsurge in the US Treasury bond yields.

Next of relevance would be the release of US ISM manufacturing PMI, which would influence sentiment around the greenback and provide some impetus for short-term traders.

Technical levels to watch

A strong follow through buying interest beyond 113.10 level, leading to a subsequent strength above 113.30 resistance, has the potential to continue boosting the pair further towards its next major hurdle near 113.80 region.

On the flip side, any pull-back now seems to find immediate support near 112.65-60 zone, which if broken could drag the pair back towards 100-day SMA support near 111.80-75 region with some intermediate support around 112.35-30 area.