USD/JPY eases from multi-day tops, still positive around 107.00 mark

• USD/JPY reversed an early dip and turned positive amid the prevalent upbeat market mood.
• The risk-on mood undermined the safe-haven JPY and remained supportive of the move up.
• The emergence of some fresh USD selling capped the upside for the major, at least for now.

The USD/JPY pair struggled to capitalize on its intraday bounce of around 50 pips, albeit has still managed to hold with modest daily gains around the 107.00 mark.

The pair witnessed some selling during the Asian session on Tuesday after White House trade advisor Peter Navarro told Fox News that the China trade deal has been terminated. The comments provided a strong boost to the safe-haven Japanese yen and dragged the USD/JPY pair to an intraday low level of 106.73.

Navarro later clarified that his comments had been taken out of context and had nothing to do with the US-China interim trade deal to reduce tariff tensions. The US President Donald Trump also tweeted that the trade agreement with China is “fully intact”, which led to a turnaround in the global risk sentiment.

The USD/JPY pair quickly reversed an early dip and turned positive for the second consecutive session on Tuesday. The upbeat market mood got an additional boost from stronger-than-expected PMI reports from the Eurozone and the UK, which coupled with a modest uptick in the US Treasury bond yields remained supportive.

However, the emergence of some fresh US dollar selling failed to impress bullish traders and kept a lid on any strong gains for the USD/JPY pair, at least for the time being. The pair has now retreated around 20 pips from daily tops, albeit remains well within a familiar trading range held over the past one week or so.

Moving ahead, market participants now look forward to the flash version of US Manufacturing and Services PMI prints for June. This will be followed by the release of New Home Sales data and the Richmond Manufacturing Index, which might influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch