USD/JPY sits comfortably above 115.00 mark, monthly high post-US jobless claims

• A combination of supporting factors pushed USD/JPY to a fresh monthly high on Thursday.
• The risk-on mood continued undermining the safe-haven JPY and provided a goodish lift.
• Elevated US bond yields, upbeat US macro data benefitted the USD and remained supportive.

The USD/JPY pair maintained its bid tone through the early North American session and was last seen hovering near the monthly top, around the 115.15-20 region.

The optimism over signs that the Omicron variant might be less severe than feared and is unlikely to derail the economic recovery remained supportive of the underlying bullish sentiment. This was evident from an extension of the recent runup in the global equity markets, which undermined the safe-haven Japanese yen and pushed the USD/JPY pair higher.

This, along with a modest US dollar strength, contributed to the ongoing upward trajectory to the highest level since November 26. The greenback drew some support from elevated US Treasury bond yields and better-than-expected US Initial Jobless Claims data, though lacked bullish conviction amid thin end-of-year trading volumes.

Nevertheless, the USD/JPY pair has now rallied over 250 pips from the monthly swing low, around the 112.60 area touched on December 2, and seems poised to appreciate further. A sustained strength above the key 115.00 psychological mark, which coincided with an ascending channel resistance, adds credence to the constructive outlook.

Hence, a subsequent move back towards challenging the multi-year high, around mid-115.00s, remains a distinct possibility. Market participants now look forward to the release of the Chicago PMI for a fresh impetus. This, along with the broader market risk sentiment, would produce some trading opportunities around the USD/JPY pair.

Technical levels to watch