USD/JPY inches closer to 110 amid improving risk appetite

• Major European equity indexes post modest gains on Monday.
• US Dollar Index consolidates last week's gains above 99.
• Markets expected to stay calm in the second half of the day.

The USD/JPY failed to hold above the 110 handle last week as the broad USD strength helped the pair limit its losses despite heightened safe-haven demand for JPY. At the start of the new week, easing worries over the coronavirus having a significant negative impact on the Chinese economy allowed the market sentiment to improve.

Nevertheless, the pair doesn't seem to be building up enough momentum to make a decisive break above 110. As of writing, the pair was up 0.12% on the day at 109.88.

Earlier in the day, China's Finance Minister Liu Kun said they are planning to introduce tax cuts to help the economy stay resilient amid the coronavirus outbreak. Reflecting the upbeat market sentiment, major European equity indexes are adding between 0.2% and 0.4% on Monday.

Presidents' Day holiday in US

In the second half of the day, US financial markets will be closed in observance of Presidents' Day and markets will be waiting for the Asian session to assess the market sentiment. There won't be any macroeconomic data releases from Japan either.

At the start of the week, the data published by Japan's Ministry of Economy revealed that Industrial Production in December expanded by 1.2% but brought the annual rate down to -3.1% from 3%.

Technical levels to watch for