USD/JPY: Looks to extend gains beyond 109.60 ahead of US PMI

The USD/JPY pair extendes the previous session's losses on Tuesday. The pair is under selling pressure after it touched the multi-month high near 110.30 on Friday.

At the time of writing, the USD/JPY pair trades at 109.54, down 0.05% for the day.

The US Dollar Index (DXY), which indicates the performance of the greenback against six major currencies, remained depressed near 89.80 with, 0.19% loss on the day. The greenback followed the US 10-year benchmark yields, which remained below 1.60%.

Investors have been digesting the Fed’s outlook on inflation. Fed officials continued to downplay pricing pressure, calling it ‘transitory’. The upbeat economic data fueled the expectation of faster economic recovery. Traders reduced their positioning in the US dollar and jumped to riskier assets on the global growth optimism.

The Organisation for Economic Co-operation and Development (OECD) remained upbeat about world economic growth in 2021 and revised the target higher by 5.8%, up from the previous 5.6. The recovery in the US and China is expected to return to pre-pandemic levels and is forecasted to have stronger economic growth from other economies including Japan.

On the other hand, the yen remained negatively affected by the extension of lockdown in Tokyo, and eight other provinces. In addition to that, the OECD lowered the Japanese economic outlook for 2021 echoed the concerns of the Japanese government and policymakers.

It is worth mentioning that S&P 500 Futures are trading at 4,204, up 0.08% for the day. 

As for now, traders are gearing up for the release of US PMI data to gauge the market sentiment.

USD/JPY Additional Levels