The USD/JPY pair continued gaining traction through early NA session and moved back above the 112.00 handle, recovering all of its losses posted on Monday.
The key US Dollar Index jumped to fresh monthly tops, supported by a strong pickup in the US Treasury bond yields, and has been one of the key factors driving the pair higher.
This coupled with improving investors' appetite for riskier assets, as depicted by a strong opening in the US equity markets, further drove flows away from traditional safe-haven currencies and collaborated to the pair's strong up-move.
On the economic data front, an unexpected drop in new home sales during August and a modest retracement in the Consumer Confidence Index did little to dent the prevalent bullish sentiment surrounding the greenback, albeit seemed keeping a lid on any further up-move for the major.
Investors now look forward to a scheduled speech by the Fed Chair Janet Yellen, which coupled with comments from other FOMC members, would provide fresh insight over the Fed's near-term monetary policy outlook and play a major role in determining the pair's next leg of directional move.
Valeria Bednarik, Chief Analyst at FXStreet writes: "In the 4 hours chart, technical indicators have lost upward strength once reaching their mid-lines, but the 100 and 200 SMAs keep grinding higher below the current level, indicating limited selling interest around the pair. To confirm further intraday advances, the pair needs to accelerate above 112.30, aiming then to retest the monthly high of 112.71."
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