USD/JPY hits fresh 4-week high, jumps above 106.50

The USD/JPY pair bullish momentum seems to have gained fresh traction, boosting the pair to a fresh 4-week high level. The pair rose to 106.70 before retracing few pips to currently trade around 106.55-60 band.  

During early Asian session the pair dipped below 106.00 handle amid mixed risk sentiment that has a minor impact on Asian equity markets. However, buoyant European equity markets trigger a fresh bout of risk-on trade lifting the pair closer to pre-Brexit high level.

Moreover, the US Dollar continues to gain traction after yesterday's upbeat housing market data out from the US now resurfaced expectations of an imminent Fed rate-hike, sooner rather than later.

An empty economic docket on Wednesday is unlikely to dent the prevalent bullish sentiment surrounding the greenback, which might continue to boost the pair even during US trading session.

Technical outlook

Pointing to the bullish set-up, research team at Danske Bank A/S notes, "Pressure stays on the upside and see scope to target the 106.84 resistance. Clearance will see further strength to 107.63/90 area though divergence on intraday tools caution corrective pullback to the 105.00 level. Break will see room for deeper pullback to 104.64 then the 104.00 level."