USD/JPY climbs to session tops, back above mid-107.00s

• USD/JPY regains positive traction on Tuesday amid a modest pickup in the USD demand.
• Monday’s upbeat US ISM PMI helped ease the recent bearish pressure around the USD.
• Concerns about surging COVID-19 cases might keep a lid on any strong gains for the pair.

The USD/JPY pair broke out of its Asian session consolidation phase and jumped to fresh session tops, just above mid-107.00s in the last hour.

Following the previous day’s intraday pullback of around 50 pips from three-day tops, the pair regained some traction on Tuesday and was support by a modest pickup in the US dollar demand. Monday’s upbeat US ISM Non-Manufacturing PMI print for June indicated that the economy is starting to recover, which helped ease the recent bearish pressure surrounding the greenback.

Meanwhile, the uptick seemed rather unaffected by growing worries about the ever-increasing number of new coronavirus cases across the world. Investors remain concerned that the recent sharp rise in COVID-19 infections might trigger renewed lockdown measures, once again putting the brakes on economic activity, and that the current economic recovery may prove to be short-lived.

This, in turn, led to a modest pullback in the global equity markets, which might extend some support to the safe-haven Japanese yen and keep a lid on any strong gains for the USD/JPY pair. Hence, it will be prudent to wait for some strong follow-through buying before positioning any further appreciating move, or the resumption of the pair’s recent recovery move from the 106.00 neighbourhood.

There isn’t any major market-moving economic data due for release on Tuesday. Hence, the USD price dynamics, along with developments surrounding the coronavirus saga will play a key role in influencing the intraday momentum and assist traders to grab some short-term opportunities.

Technical levels to watch