USD/JPY clings to gains near session tops, just below mid-107.00s
- China's move to buy more US farm products boosted global risk sentiment.
- Fading safe-haven demand undermined the JPY and remained supportive.
- Bullish traders further took cues from recovering US bond yields/USD uptick.
The USD/JPY pair caught some fresh bids on Wednesday and recovered a major part of the previous session's slide to just over two-week lows.
The pair on Tuesday failed to capitalize on its early uptick back closer to 100-day SMA barrier and turned lower for the fourth consecutive session. The initial leg of the intraday downtick was led by a modest intraday US Dollar pullback, further fueled by the disappointing release of the Conference Board's US Consumer Confidence Index.
Renewed trade optimism remained supportive
The greenback lost some additional ground on reports that an impeachment inquiry will be started against US President Donald Trump. This coupled with Trump's angry rhetoric on China signalled worsening US-China trade relations, which boosted the Japanese Yen's safe-haven status and exerted some additional pressure on the major.
The momentarily slipped below the 107.00 round-figure mark, though managed to regain positive traction during the Asian session on Wednesday following reports that China is planning to buy more US farm products as a goodwill gesture ahead of the upcoming high-level trade talks in early-October.
This comes on the back of the recent move by the US to exempt $250 billion worth of Chinese goods from a 25% tariff and boosted investors' appetite for riskier assets. Fading safe-haven was further reinforced by a pickup in the US Treasury bond yields, which extended some support to the USD and remained supportive of the uptick.
It will now be interesting to see if the pair is able to capitalize on the positive momentum or once again runs out of the steam at higher levels amid absent relevant market moving economic releases from the US, albeit scheduled speeches by influential FOMC member might produce some short-term trading opportunities.
Technical levels to watch