The USD/JPY pair added to its strong intraday gains and jumped to fresh one-week tops, around the 105.40 region during the first half of the European session. The prevalent risk-on environment undermined the safe-haven Japanese yen and was seen as a key factor fueling the momentum.
The USD/JPY pair has now climbed back nearing a one-year-old descending trend-line resistance on the monthly chart. A sustained breakthrough will be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move.
Meanwhile, technical indicators on the daily chart maintained their bullish bias and are still far from being in the overbought territory. Some follow-through buying beyond the monthly swing highs, around the 105.75 region, will strengthen the bullish bias and will drive the USD/JPY pair beyond the 106.00 mark. Bulls might then aim towards testing the next relevant resistance marked by September 2020 highs, around the 106.45-55 region.
On the flip side, the key 105.00 psychological mark now becomes immediate strong support to defend. Any subsequent dip might still be seen as a buying opportunity and remain limited. Only a subsequent fall below last week's swing lows, around the 104.40 region will invalidate the bullish outlook.