USD/JPY clings to gains near session tops, bulls eyeing a move beyond 108.00 mark

The USD/JPY pair edged higher through the mid-European session and was last seen hovering around daily tops, near the 107.80-85 region.

Following the previous day's two-way price moves, the pair managed to regain some positive traction on Tuesday and tested the top end of a two-week-old trading range. The upbeat market mood undermined demand for the safe-haven Japanese yen and turned out to be one of the key factors driving the pair higher.

The global risk sentiment remained well supported by the recent optimism about the easing of lockdown restrictions across the worlds, which further fueled hopes of a sharp V-shaped recovery for the global economy. This, in turn, largely offset concerns about worsening relations between the US and China.

It is worth recalling that report on Monday indicated that China ordered state-run agricultural companies to pause purchases of some US farm goods including soybeans. The report further noted that China halted American cotton and corn imports, while some pork purchases have also been delayed.

On the other hand, the bearish pressure surrounding the US dollar remained unabated in the wake of the widespread protests in dozens of American cities over the death of George Floyd. A broad-based USD weakness held bulls from placing any aggressive and might cap any strong gains for the USD/JPY pair.

There isn’t any major market-moving economic data due for release on Tuesday, leaving the pair at the mercy of the USD price dynamics/broader market risk sentiment. Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the 108.00-108.10 region, before positioning for any further near-term appreciating move.

Technical levels to watch