USD/JPY sits near daily tops around 109.80 region, lacks follow-through
- USD/JPY regains some positive traction on the first day of a new week.
- Improving risk sentiment dented the JPY’s perceived safe-haven status.
- A subdued USD price action seemed to keep a lid on any strong gains.
The USD/JPY pair reversed an Asian session dip and is currently placed near the top end of its daily trading range, around the 109.80-85 region.
Following the previous session's modest pullback and a subsequent slide to mid-109.00s on Monday, the pair managed to regain some positive traction and was being supported by receding demand for traditional safe-haven assets.
A subdued USD demand might cap the upside
Some early signs that the spread of the deadly coronavirus could be slowing led to a modest recovery in the global risk sentiment and turned out to be one of the key factors weighing on the Japanese yen's perceived safe-haven status.
The risk-on flow was further reinforced by a modest uptick in the US Treasury bond yields, which remained supportive of the pair's mildly positive tone, a subdued US dollar price action did little to provide any additional boost.
As investors looked past Friday's mixed US monthly jobs report, the greenback consolidated its recent strong gains to near four-month tops. Bullish traders seemed reluctant to place any aggressive bets, which might keep a lid on any runaway rally.
In absence of any major market-moving economic releases, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair's momentum on the first day of a new trading week.
Technical levels to watch