USD/JPY climbs to fresh weekly top above 105.40

• USD/JPY is rising for third straight trading day on Monday.
• JPY struggles to find demand as market mood remains upbeat.
• US Dollar Index turns flat near 90.40 after edging lower earlier in the day.

The USD/JPY pair preserves its bullish momentum on Monday as the JPY continues to have a difficult time finding demand in the risk-positive market environment. As of writing, the pair was trading at fresh weekly highs at 105.42, gaining 0.46% on a daily basis.

Eyes on global equity indexes

The market mood remains upbeat at the start of the week with major European equity indexes rising between 0.5% and 2% on the day. The US markets will be closed due to the Presidents Day holiday and USD/JPY is likely to consolidate its gains in the second half of the day.

Earlier in the day, the data from Japan showed that Industrial Production in December declined by 1% and came in better than the market expectation for a decrease of 1.6%. Confirming the risk-positive market environment, the Nikkei 225 Index gained nearly 2% on Monday and rose above 30,000 for the first time in more than 30 years.

Moreover, Japan's Health Ministry announced on Sunday that it has officially approved the Pfizer-BioNTech coronavirus vaccine.

Nikkei 225 surges above 30000, next target is at 32115/20 – Credit Suisse.

On Tuesday, the Tertiary Industry Index will be featured in the Japanese economic docket. If risk flows continue to dominate the financial markets on Tuesday, the JPY could remain on the back foot and additional gains in USD/JPY could be seen during the Asian trading hours.

Technical levels to watch for