FxWirePro: USD/JPY starts the week on a positive note, risk sentiment remains the major driver

USD/JPY chart - Trading View 

USD/JPY was trading marginally higher on the day with session high at 110.25 and low at 110.01.

The pair opened the week on a positive note and risk sentiment will remain the major driver for price action.

The US Federal Reserve’s bi-yearly report to Congress on monetary policy was released on Friday, which reaffirmed the central bank's commitment toward economic growth. 

The Fed maintained its stance on low-interest rates until further progress was made in recovering from last year’s economic setback due to the pandemic.

Further, Japan´s top government spokesman, over the weekend said that the country is ready to pump more money into the economy to aid pandemic relief and after announcing yet another state of emergency for Tokyo.

The US Treasury 10-year benchmark yields retreat slightly lower, undermining the demand for the US dollar, while DXY was up 0.09%.

Technical bias for the pair remains bullish. Pullback has bounced off 55-EMA support, upside is capped at 5-DMA.

Break above 5-DMA will see more gains. Next hurdle for bulls lies at 20-DMA at 110.57. On the flipside, weakness only below 55-EMA.

Major Support Levels: 

S1: 109.78 (55-EMA)

S2: 109.51 (23.6% Fib)

S3: 109.22 (Cloud base)

Major Resistance Levels: 

R1: 110.24 (5-DMA)

R2: 110.37 (21-EMA)

R3: 110.57 (20-DMA)

Summary: USD/JPY starts the week on a positive note. Bounce off 55-EMA on Friday's trade has buoyed bulls, raising scope for upside resumption.