The USD/JPY pair continues to build on its positive momentum, extending gains for the second consecutive day on Monday. Currently trading around the 140.25-140.35 region, just a few pips below a four-day high reached recently, the pair maintains a bullish tone during the European session.

The recovery of the US Dollar (USD) following the post-NFP (Non-Farm Payrolls) report supports the USD/JPY pair as the new week begins. Despite the mixed US jobs data released on Friday, market participants still anticipate a 25 basis points rate hike by the Federal Reserve (Fed) in its upcoming policy meeting.

This expectation contributes to the rise in US Treasury bond yields, providing further support to the Greenback.

In contrast, the Japanese Yen (JPY) faces downward pressure due to a more dovish stance adopted by the Bank of Japan (BoJ). Additionally, the overall positive sentiment in equity markets reduces the JPY’s appeal as a safe-haven currency, boosting the USD/JPY pair.

Nevertheless, the potential intervention by Japanese authorities limits the JPY’s losses and prevents significant gains for the USD/JPY pair, at least for now.

As a result, cautiousness is advised for aggressive bullish traders before considering further intraday appreciation. Nonetheless, the fundamental factors suggest that the path of least resistance for the USD/JPY pair remains on the upside.

Market participants are now looking towards the US ISM Services PMI data, scheduled for release during the early North American session. Additionally, the movement of US bond yields, coupled with overall risk sentiment, is expected to provide fresh momentum to the pair.


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