• Rising US bond yields offset subdued USD and help gain positive traction.
• Fading safe-haven demand provides an additional boost.
• Not so dovish comments by BoJ’s Amamiya/Wakatabe cap gains.
The USD/JPY pair moved past 106.30-40 supply zone and spike to fresh multi-day tops in the last hour, albeit quickly retreated few pips thereafter.
Against the backdrop of a subdued US Dollar price action, a goodish pickup in the US Treasury bond yields assisted the pair to take out some short-term trading stops placed at the mentioned hurdle and rise to an intraday high level of 106.60.
Adding to this, a mild positive opening across European bourses, pointing to a slight improvement in investors' appetite for riskier assets, undermined the Japanese Yen's safe-haven appeal and provided an additional boost.
Further gains, however, remained limited and the pair quickly retreated around 20-pips from session tops as traders refrained from placing aggressive bets ahead of the Fed's latest monetary policy update, due on Wednesday.
Moreover, the not so dovish comments by BoJ’s Amamiya and Wakatabe further underpinned the Japanese Yen and collaborated to the pair’s retracement from higher levels.
Technical levels to watch
Momentum beyond 106.60-70 area now seems to assist the pair to head back towards reclaiming the 107.00 handle before lifting it further towards 107.35-40 supply zone. On the flip side, the 106.00 handle now seems to protect the immediate downside, which if broken might turn the pair vulnerable to aim back towards challenging an important support near mid-105.00s.
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