USD/JPY retakes 110.00 mark and beyond ahead of US PMIs

• A combination of factors undermined the JPY and assisted USD/JPY to gain traction on Monday.
• Bulls seemed rather unaffected by the ongoing USD retracement slide from multi-month tops.
• Investors eye US PMIs for some impetus, though the focus remains on Jackson Hole Symposium.

The USD/JPY pair continued gaining traction through the mid-European session and climbed to fresh daily tops in the last hour, further beyond the key 110.00 psychological mark.

A combination of supporting factors assisted the USD/JPY pair to attract some dip-buying near the 109.65 region on Monday and move well within the striking distance of last week's swing highs. The risk-on impulse dented demand for the safe-haven Japanese yen, which was further pressured by the worsening COVID-19 situation in Japan.

In fact, Japan's minister in charge of the coronavirus response, Nishimura Yasutoshi, suggested on Sunday that the government may introduce tougher measures to curb infections under the current law. This comes on the back of an extension of the state of emergency in Tokyo and 12 other prefectures, which will run through September 12.

Adding to this, weaker August PMI prints out of Japan further acted as a headwind for the JPY. This, along with a goodish pickup in the US Treasury bond yields, remained supportive of the bid tone surrounding the USD/JPY pair. Bulls seemed rather unaffected by the ongoing US dollar retracement slide from a nine-and-half-month top.

The uncertainties tied to the COVID-19 situation now seem to have forced investors to reassess the timing of the Fed's tapering. This, in turn, was seen as a key factor that prompted some follow-through USD profit-taking. Hence, the focus will remain on Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this week.

In the meantime, traders might take cues from the release of US Manufacturing and Services PMIs later during the early North American session. Apart from this, the US bond yields might influence the USD price dynamics. This, along with the broader market risk sentiment, might produce some trading opportunities around the USD/JPY pair.

Technical levels to watch