USD/JPY touches 109 as US stocks rally

The USD/JPY pair extended its bullish move in the NA session and refreshed its daily high at 109.00 as the traditional safe-haven JPY is struggling to find demand amid increasing risk appetite. As of writing, the pair was trading at 108.98, gaining more than 100 pips, or 1.1%, on the day.

On the back of easing tensions between North Korea and the United States and a less-than-expected damage by Hurricane Irma, major equity indexes in the U.S. started the day higher and gathered momentum. At the moment, the Dow Jones Industrial Average was gaining more than 1% while the S&P 500 was up 0.9%.

• US stocks surge at open as Irma, N. Korea fears ease

Moreover, US Treasury bond yields took advantage of the improving market sentiment and staged o robust rebound on Monday with the yield for the 10-year reference gaining nearly 3% at 2.12% and providing fuel for the greenback's recovery as well. The US Dollar Index, which slumped to its lowest level in more than 30 months at 90.99 on Friday, is now at 91.77, up 0.5% on the day.

With no major data releases in the remainder of the day, the pair is likely to preserve its bullish momentum. 

Technical levels to consider

Above 109, the pair could face the first technical resistance at 109.25 (20-DMA) ahead of 110.00 (50-DMA/psychological level) and 110.80 (100-DMA). On the downside, supports could be seen at 108.15 (daily low), 107.30 (Sep. 8 low) and 107.00 (psychological level). The RSI on the H4 graph continues to gain traction above the 50 mark, suggesting that the pair could build on its gains in the near-term.