USD/JPY climbs to over one-week tops, around mid-110.00s

The USD/JPY pair maintained its bid tone through the first half of the European session and shot to over one-week tops, around mid-110.00s in the last hour.

Following the previous day's modest pullback, the USD/JPY pair attracted some dip-buying near the key 110.00 psychological mark and built on this week's goodish rebound from the 109.00 neighbourhood. This marked the third day of a positive move in the previous four sessions and was supported by the risk-on impulse in the markets.

Investors now seemed to have set aside worries about the potential economic fallout from the fast-spreading Delta variant of the coronavirus. This was evident from a generally positive tone around the equity markets, which, in turn, undermined the safe-haven Japanese yen and was seen as a key factor driving the USD/JPY pair higher.

Bullish traders further took cues from a strong pickup in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbed back closer to the 1.30% threshold and acted as a tailwind for the US dollar. This further contributed to the USD/JPY pair's intraday positive move to the highest level since July 14.

Market participants now look forward to the US economic docket, featuring the release of the flash US PMI prints. This, along with the US bond yields, might influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for some short-term opportunities around the USD/JPY pair.

Technical levels to watch