USD/JPY climbs to 10-day highs above 108.70 boosted by upbeat market sentiment

  • 10-year US T-bond yield extends recovery to June highs.
  • Wall Street looks to open in the positive territory.
  • US Dollar Index posts modest gains, stays below 97.

The USD/JPY pair continues to recover from the multi-month lows that it set at 107.80 on Monday as the safe haven JPY struggles to find demand in the risk-on environment. As of writing, the pair was up 0.26% on the day at 108.72, a couple of pips below the 10-day high that it touched earlier in the session.

The fact that the U.S. reached a deal with Mexico to cancel tariffs over the weekend allowed markets to start the week on a positive note with regards to risk appetite. Moreover, the lack of fresh developments surrounding the U.S.-China trade conflict helped the 10-year US Treasury bond yield rebound from the lowest level it touched since September of 2017 and provided a boost to the positively-correlated USD/JPY pair. 

After closing the first day of the week with a gain of more than 2%, the 10-year T-bond yield was last seen adding 1.4% on a daily basis on Tuesday. Reflecting the upbeat tone, major European equity indexes are rising sharply today and the S&P 500 Futures is up 0.5% to hint at a positive start in Wall Street.

In the second half of the day, the IBD/TIPP Economic Optimism Index, and the Producer Price Index (PPI) from the U.S. will be looked upon for fresh impetus. The first data of the day showed that the NFIB Business Optimism Index improved to 105 in May from 103.5 in April. At the moment, the US Dollar Index is posting small daily gains on the day at 96.80.

Technical levels to watch for

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