USD/JPY Price Analysis: Challenges over one-week-old trading range hurdle, above 110.00

• USD/JPY gained traction for the second successive day and climbed to one-week tops.
• Bulls await a sustained move beyond a trading range hurdle before placing fresh bets.

The USD/JPY pair added to the previous day's positive move and gained some follow-through traction for the second consecutive session on Thursday. The momentum pushed the pair to one-week tops, around the 110.20-25 region, during the first half of the European trading action.

The latest optimism that the continuous rise in new coronavirus cases won't derail a global economic recovery continued undermining demand for the safe-haven Japanese yen. Bulls further took cues from the recent strong move up in the US Treasury bond yields. This, along with a goodish pickup in demand for the US dollar, provided an additional boost to the USD/JPY pair.

From a technical perspective, the 110.20-25 area marks the top boundary of a short-term trading range held over the past one week or so. A sustained move beyond will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The USD/JPY pair might then aim to surpass monthly swing highs, around the 110.80 region and reclaim the 111.00 mark.

Meanwhile, technical indicators on hourly charts maintained their positive bias and have just started gaining traction on the daily chart. The technical set-up supports prospects for an eventual breakout to the upside. That said, it will still be prudent to wait for a sustained move beyond the trading range hurdle before positioning for any further appreciating move.

On the flip side, any meaningful slide below the key 110.00 psychological mark might continue to find decent support near the 109.75 horizontal level. This is followed by the lower boundary of the mentioned trading range, around mid-109.00s. Sustained weakness below will shift the near-term bias in favour of bearish traders and prompt some technical selling around the USD/JPY pair.

The next relevant support is pegged near the 109.10 area ahead of the 109.00 round-figure mark. The downward trajectory could further get extended and drag the USD/JPY pair back towards monthly swing lows, around the 108.70 region touched on August 4.

USD/JPY 1-hour chart

Technical levels to watch