USD/JPY sits near daily tops, comfortably above 110.00 ahead of US Retail Sales

The USD/JPY pair built on its steady intraday positive move through the mid-European session and shot to fresh daily tops, around the 110.25 region in the last hour.

The pair caught some fresh bids on the last trading day of the week and for now, seems to have stalled this week's retracement slide from the 110.70 region. This marked the first day of a positive move in the previous three sessions and was sponsored by a combination of factors.

The Japanese yen weakened a bit after the Bank of Japan decided to maintain the status quo at the July monetary policy meeting and lowered its growth forecast for the current fiscal year. The Japanese central bank expects the economy to expand by 3.8% as against 4.0% projected in April.

Apart from this, a generally positive tone around the equity markets was seen as another factor that undermined the safe-haven JPY. Bullish traders further took cues from a goodish pickup in the US Treasury bond yields, which, to a larger extent, helped offset a subdued US dollar demand.

Meanwhile, investors seem convinced that the Fed will tighten its policy sooner than anticipated amid rising inflationary pressures despite Fed Chair Jerome Powell's dovish testimony. This acted as a tailwind for the greenback and remained supportive of the USD/JPY pair's positive move.

Market participants now look forward to the US economic docket, highlighting the release of monthly Retail Sales figures and Prelim Michigan Consumer Sentiment. The data, along with the US bond yields and the broader market risk sentiment, might provide some impetus to the USD/JPY pair.

Technical levels to watch