USD/JPY rises to session tops, around mid-109.00s amid improving risk sentiment

   •  Improving risk-sentiment dent JPY’s safe-haven appeal and remain supportive.
   •  Mnuchin’s optimistic trade-related comments provided an additional boost.
   •  Focus remains on the upcoming FOMC policy update and US-China trade talks.

The USD/JPY pair built on its intraday bounce from over one-week lows and is currently placed at session tops, around mid-109.00s, recovering a major part of the overnight slide.

A combination of factors helped the pair to stall its recent corrective slide from the key 110.00 psychological mark and attract some fresh buying, for the second straight session, near the 109.15 region.

Slight improvement in risk sentiment, as depicted by positive mood across European bourses and indications of a positive opening in the US equity markets, was seen denting the Japanese Yen's safe-haven status.

The pair gained additional traction following some optimistic trade-related comments by the US Treasury Secretary Steven Mnuchin, expecting to see significant progress in US-China trade talks this week.

Meanwhile, a modest pickup in the US Dollar demand, despite a subdued action around the US Treasury bond yields, provided an additional boost and remained supportive of the pair's intraday up-move of over 35-pips.

Market participants now look forward to the US economic docket, highlighting the only important release of the Conference Board's consumer confidence index, in order to grab some short-term trading opportunities.

The key focus, however, will be on the latest FOMC monetary policy update, due to be announced on Wednesday after a two-day meeting, which will play an important role in providing some fresh directional impetus.

Technical outlook

Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The short-term technical picture remains neutral, with the pair holding above the 109.05 level, which stands for the 61.8% retracement of the latest daily decline.”

“In the 4 hours chart, a flat 100 SMA converges with the mentioned Fibonacci support, reinforcing it. The 200 SMA maintains its downward slope currently at around 110.00, while technical indicators have turned higher, but remain within negative levels and below their weekly highs,” Valeria adds further.