- Trump’s threat to raise tariffs on China kept a lid on the overnight uptick.
- Overall market sentiment remained upbeat and helped regain some traction.
- Traders now eye Tuesday’s release of the US PPI for some fresh impetus.
The USD/JPY pair caught some fresh bids on Tuesday and jumped back above mid-108.00s, back closer to the overnight swing high.
US President Donald Trump's announcement to suspend the plan to impose tariffs on all Mexican goods helped improve the global risk sentiment and weighed on the Japanese Yen's perceived safe-haven status.
The risk-on mood was evident from a solid rebound in the US Treasury bond yields, which underpinned the US Dollar demand and assisted the pair to build on its recent bounce from multi-month lows.
The pair opened with a bullish gap and climbed to over one-week high level of 108.72, albeit started losing the positive momentum in reaction to Trump's fresh threat to raise tariffs on imports from China.
Despite the negative headlines, the Japanese Yen remained depressed amid a follow-through uptick in investors' risk appetite and helped the pair to regain some positive traction during the Asian session on Tuesday.
It, however, remains to be seen if the pair is able to capitalize on the up-move or meets with some fresh suply at higher levels amid firming expectations that the Fed will eventually move to cut interest rates in 2019.
Market participants now look forward to the US economic docket - highlighting the release of the Producer Price Index (PPI) for some short-term trading impetus later during the early North-American session.
Technical levels to watch
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