USD/JPY clings to daily gains, holds comfortably above mid-107.00s

The USD/JPY pair held on to its daily gains above mid-107.00s through the early North American session, albeit lacked any strong follow-through.

The pair built on last week's goodish bounce from the 106.00 neighbourhood, or seven-week lows and gained some follow-through traction for the fifth consecutive session on Tuesday. The uptick, however, lacked any bullish conviction and the USD/JPY pair remained below three-week tops set on Monday.

A surge in new coronavirus cases forced a number of states in the US to reconsider lockdown measures to contain the outbreak. This, in turn, dampened prospects for a sharp V-shaped economic recovery, which extended some support the Japanese yen's safe-haven status and capped the USD/JPY pair.

On the other hand, the US dollar struggled to capitalize on its intraday positive move, instead witnessed some selling and led to the USD/JPY pair's modest intraday pullback. Tuesday's mixed US macro data – Chicago PMI and Consumer Confidence Index – also failed to impress the USD bulls.

Data released this Tuesday showed that Chicago PMI edged higher to 36.6 in June from 32.3 previous but fell short of consensus estimates pointing to rise to 45. Conversely, the Conference Board's Consumer Index jumped to 98.1 in June from the previous month's downwardly revised reading of 85.9.

Moving ahead, market participants now look forward to comments by the Fed Chair Jerome Powell, who along with Treasury Secretary Steven Mnuchin, is scheduled to testify before the House Financial Services Committee.

Technical levels to watch