USD/JPY moves above mid-107.00s, closer to session tops

• A combination of supporting factors assisted USD/JPY to gain some traction on Tuesday.
• The upbeat market mood undermined the safe-haven JPY and remained supportive.
• The USD was back in demand amid surging US bond yields, upbeat US retail sales data.

The USD/JPY pair edged higher during the early North American session and is currently placed near the top end of its two-day-old range, just above mid-107.00s.

A strong rally across the global equity markets – supported by the Fed's latest changes to its bond-buying program – continued undermining the safe-haven Japanese yen and extended some support to the USD/JPY pair. Bulls further took cues from some follow-through uptick for the third straight session in the US Treasury bond yields.

This coupled with a goodish intraday US dollar bounce remained supportive of the mildly positive tone surrounding the USD/JPY pair. The greenback got an additional boost following the release of stronger-than-expected US monthly retail sales, which reinforced the idea that the worse of the coronavirus pandemic might be over.

Meanwhile, the Fed Chair Jerome Powell, while testifying before the Senate Banking Committee, again offered a bleak outlook for the US economy and said that significant uncertainty remains about the timing and strength of the US economic recovery. Powell reiterated that the Fed remains committed to using its full range of tools to support the economy.

The comments did little to provide any meaningful impetus to the major, though bulls need to wait for some strong follow-through buying before positioning for any further near-term appreciating move.

Technical levels to watch