USD/JPY climbs to multi-day tops, bulls flirting with 50-DMA near 107.85-90 region
- USD/JPY gains some positive traction for the second straight session on Tuesday.
- The upbeat market mood undermined the safe-haven JPY and remained supportive.
- Some renewed USD weakness failed to impress bulls and capped any further gains.
The USD/JPY pair climbed to four-day tops on Tuesday, with bulls making a fresh attempt to extend the momentum beyond 50-day SMA and the 108.00 mark.
The pair added to the overnight modest gains and edged higher for the second consecutive session on Tuesday. The upbeat market mood, as depicted by a strong rally in the US equity futures, undermined demand for the safe-haven Japanese yen and provided a goodish lift to the USD/JPY pair.
Despite concerns over worsening US-China relations, the easing of lockdown restriction globally fueled hopes about a global economic recovery from the coronavirus pandemic. This coupled with the latest optimism over a potential COVID-19 vaccine remained supportive of the risk-on environment.
Bulls further took cues from a goodish pickup in the US Treasury bond yields, albeit some renewed weakness surrounding the US dollar might keep a lid on any runaway rally. Hence, it will be prudent to wait for some strong follow-through buying before placing any fresh bullish bets.
Later during the early North American session, the release of of the Conference Board's US Consumer Confidence Index might influence the USD price dynamics and produce some short-term trading opportunities. Apart from this, traders will also keep a close eye on signs of any further escalation in diplomatic tensions between the world's two largest economies.
Technical levels to watch