USD/JPY clings to gains near weekly tops, around 110.25-30 area
- A combination of factors assisted USD/JPY to regain positive traction on Friday.
- A positive risk tone undermined the safe-haven JPY and extended some support.
- A pickup in the US bond yields benefitted the USD and provided a minor boost.
The USD/JPY pair held on to its intraday gains heading into the European session and was last seen hovering near daily tops, around the 110.25-30 region.
Having defended the key 110.00 psychological mark, the USD/JPY pair caught some fresh bids on the last trading day of the week and reversed the overnight modest losses. This marked the third day of a positive move in the previous four and was supported by a combination of factors.
A generally positive tone around the equity markets undermined the safe-haven Japanese yen and extended some support to the USD/JPY pair. Bulls further took cues from a goodish pickup in the US Treasury bond yields, which was seen as a key factor that benefitted the US dollar.
That said, concerns that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery might act as a headwind for the USD/JPY pair. Hence, it remains to be seen if bulls are able to capitalize on the move or the pair meets with fresh supply at higher levels.
Market participants now look forward to the US economic docket, featuring the release of the flash PMI prints later during the early North American session. This, along with the US bond yields, might influence the USD price dynamics and provide some trading impetus to the USD/JPY pair.
Apart from this, developments surrounding the coronavirus saga will continue to play a key role in driving the broader market risk sentiment. This might further contribute to producing some short-term trading opportunities around the USD/JPY pair.
Technical levels to watch