USD/JPY climbs to near 2-week tops, beyond mid-109.00s

The safe-haven Japanese yen continued with its weakening trend on Friday and pushed the USD/JPY pair to near two-week tops, around the 109.55-60 region in the last hour.

Following a knee-jerk slide to sub-109.00 level earlier during the Asian session on Friday, the pair caught some fresh bids and added to the overnight strong gains amid a fresh wave of the global risk-on trade.

A combination of factors remain supportive

Investors' appetite for perceived riskier assets got a strong boost after reports on Thursday indicated that the US has reached a “phase-one” trade deal in principle with China ahead of the December 15 deadline.

The signing of the deal now averts the planned new US tariffs on around $160 billion worth of Chinese goods and the US negotiators have also offered to reduce existing tariffs on about $375 billion by 50%.

Adding to the trade optimism, the outcome of the UK election, wherein the incumbent Conservative Party won a clear majority removed any risk of a no-deal Brexit and further boosted the global risk sentiment.

The risk-on mood was further reinforced by some follow-through pickup in the US Treasury bond yields, which helped offset some US dollar weakness and remained supportive of the ongoing positive move.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of monthly retail sales data in order to grab some short-term trading opportunities on the last day of the week.

Technical levels to watch