USD/JPY sits near 1-month tops, around mid-111.00s

The USD/JPY pair edged higher during the early European session and moved back above mid-111.00s, closer to one-month tops set on Tuesday.

Following an early dip to 110.75 region, the pair managed to regain some positive traction and is currently placed near the top end of a four-day-old trading range. A solid recovery in the global risk sentiment, as depicted by strong gains in the equity markets, undermined the Japanese yen's safe-haven demand and turned out to be one of the key factors lending some support to the major.

The Fed's unprecedented QE program to buy unlimited amounts of Treasury bonds and mortgage-backed securities helped ease market concerns over tightening liquidity. This coupled with fact that the US Senate finally reached an agreement on a stimulus package to offset any negative impact on the US economy from the coronavirus pandemic added to the latest optimism and boosted investors' confidence.

However, some follow-through US dollar long-unwinding trade failed to impress bullish trade and kept a lid on any further gains, at least for the time being. Hence, it will be prudent to wait for some strong follow-through buying before traders position for any further near-term appreciating move, possibly towards reclaiming the 112.00 round-figure mark and beyond.

Moving ahead, Wednesday's US economic docket, highlighting the release of Durable Goods Orders data, will now be looked upon for some short-term trading opportunities later during the early North-American session. Meanwhile, the key focus will remain on developments surrounding the coronavirus saga, which should continue to play a key role in influencing the broader market risk sentiment.

Technical levels to watch