USD/JPY eases from daily tops near 109.50 ahead of US consumer sentiment data

The USD/JPY pair edged higher in the early trading hours of the American session but couldn't gather enough momentum to break above the multi-month high that it set near 109.50 on Thursday. As of writing, the pair was trading at 109.34, adding 0.06% on a daily basis.

US T-bond yields continue to push higher 

Earlier in the day, White House press secretary Stephanie Grisham told reporters that they were very optimistic about getting a trade deal with China and triggered a fresh bout of risk-on flows to provide a boost to the pair. The 10-year US Treasury bond yield, which gained more than 10% since the start of the week, extended its rally and was last up around 1% on the day at 1.938%.

Regarding the heightened expectations of the US and China finally reaching a trade deal, "It will still be a tough deal to make, though, and we should be prepared for potential set-backs on the way," said Danske Bank analysts. "China has some leverage due to the weakening US economy that will increasingly hurt Trump's re-election platform. On the other hand, China also wants a solution to the trade war in order to slow down the pace of companies that are leaving China for production in other countries. So the two sides should be able to land a phase one deal."

Meanwhile, ahead of the University of Michigan's preliminary Consumer Sentiment Survey for November, the US Dollar Index continues to edge higher to allow the pair to stay in the positive territory. At the moment, the index is adding 0.2% at 98.33 and remains on track to gain more than 1% on a weekly basis.

Technical levels to watch for