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  • USD/JPY seesaws around the highest levels since early-April.
  • Risk-on sentiment tightens the grip amid increasing hopes of economic recovery, receding riots in the US.
  • Upbeat data, hopes of further monetary easing add to the pair’s strength.
  • Risk catalysts will direct market performance amid a light calendar.

USD/JPY consolidates the previous day’s run-up to a multi-day high while declining to 108.90 at the start of Thursday’s Asian session. In doing so, the yen pair awaits fresh catalysts to extend the two-day run-up backed by risk-on sentiment.

Optimism all around…

Be it receding public unrest in the US or Trump administration’s readiness to provide funding to the coronavirus (COVID-19) vaccine programs, not to forget upbeat data and hopes of the economic restart, global markets are optimistic in recent days.

With US President Donald Trump’s step back from earlier threat to use harsh military power to tame the protests against the alleged police killing of Minnesota’s George Floyd, riots in the US seem to have receded off-late. In another market-positive effort, US President Trump extended government funding to five vaccine programs.

Elsewhere, the hopes of the economic recovery are gaining momentum with the key economies in Europe tightening their belts to wipe off the pandemic-led halt in activities. Further, expectations of another round of stimulus from the major central banks, starting from the ECB, as well as upbeat US data also helped the pair.

Against this backdrop, the US 10-year Treasury yields grew over six basis points (bps) to 0.75% whereas Wall Street stays firmly bid by the end of their Wednesday’s trading.

Investors may now keep eyes on the macro for immediate direction amid the lack of major data/events on the calendar during the Asian session. However, monetary policy meeting by the European Central Bank (ECB) and the US Jobless Claims remain as the key to watch afterward.

Technical analysis

Bulls are again preparing to confront the 109.30/40 resistance area comprising April high and multiple lows marked since the early-February. Though, a downside break below 200-day SMA level of 108.38 could recall 108.00 on the charts.