USD/JPY testing monthly highs near 106.50

The bid tone around the US dollar keeps growing bigger post-European open, now pushing the USD/JPY pair towards fresh four-month highs reached at 106.53 a day before.

USD/JPY tracks European stock higher

The dollar-yen pair picked-up significant strength over the last hour after a brief period of consolidation near 106.10 levels, largely on the back of resurgence of risk friendly environment as the European equities inch higher.

Additionally, the extension of gains in the US dollar across the board, further collaborated to the upside in the major. Meanwhile, the USD index jumps +0.30% to fresh session highs of 97.37. The USD/JPY pair trades +0.29% higher at session peaks of 106.45 levels.

Amid a data-quiet trading session today, the major is likely to take cues from the broader market sentiment.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 106.53 (Multi-week highs). A break above the last, the major could test 106.85 (post-Brexit high). While to the downside, the immediate support is seen at 105.71 (5-DMA) and below that at 105.43 (50-DMA).