USD/JPY reclaims 114.00 mark, aiming back towards last week’s multi-month highs

Having posted a session low at 112.87 level, the USD/JPY pair regained traction and built on to its move back above 114.00 handle to reverse all of its losses recorded in the previous session.

Currently trading around 114.35-40 region, a fresh wave of risk-on trade was seen weighing on the Japanese Yen's safe-haven appeal and lifted the pair closer to 9-1/2 month high near 114.80-85 region touched last week. 

The prevalent upbeat sentiment surrounding European equity markets is reflective of the improving investor risk-sentiment, with the Italian referendum-led initial jitters in global financial taking the backseat, and is supportive of strong bid tone surrounding the major.

With global risk sentiment turning out to be a key driver of the pair's momentum, traders now shift their focus to the release of US ISM non-manufacturing PMI print, later during NA session, in order to grab some short-term trading opportunities.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The pair is now battling with a major Fibonacci resistance in the 114.00 region, and renewed buying interest above it, will likely open doors for a continued advance towards the 116.00 price zone. In the 4 hours chart, technical indicators head firmly lower, with the Momentum indicator having entered bearish territory, although in the same chart, the 100 SMA continued advancing below the current level, now around 111.10."