- USD/JPY gains some traction amid improving risk sentiment.
- Sliding US bond yields, subdued USD demand capped gains.
- The key focus will remain on the latest FOMC policy update.
The USD/JPY pair traded with a mild positive bias through the Asian session on Tuesday and is currently placed near the top end of the overnight trading range, above mid-108.00s.
Having found some support near the 108.45-40 region (last week’s swing lows), the pair managed to gain some traction on Tuesday and for now, seems to have snapped three consecutive days of losing streak.
Upside seems limited ahead of FOMC
In absence of any fresh development on the US-China trade front, a slight improvement in the global risk sentiment undermined the Japanese yen’s perceived safe-haven demand and extended some support to the major.
It is worth mentioning that the US Agriculture Secretary Sonny Perdue, as reported by Bloomberg, said that the US is unlikely to impose more tariffs on around $156 billion worth Chinese products on December 15.
Meanwhile, the ongoing slide in the US Treasury bond yields, ahead of the highly anticipated FOMC decision on Wednesday, kept the US dollar bulls on the defensive and capped any strong positive move for the major.
Hence, it will be prudent to wait for some follow-through buying before confirming that the recent pullback from six-month tops is over and positioning for any further appreciation amid absent market-moving economic releases.
Technical levels to watch
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