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  • USD/JPY buying regains momentum as risk-on sentiment strengthens.
  • Widening US-Japan 10-year yield spread remains JPY-negative.
  • Next of relevance remains US Housing data and Consumer Sentiment.

The USD/JPY pair picked up fresh bids and hit session highs near 106.50 levels in the European session, as the recovery in the risk sentiment gathered steam, as reflected by the extension of the relief rally in the Treasury yields and S&P 500 futures.          

The optimistic comments on trade by the US President Trump overnight has prompted a positive shift in the risk sentiment and diminished the bids for the safe-havens such as the Yen.

Focus on US data for fresh impetus

The buying interest around the US dollar remains unabated amid receding US recession fears, in the wake of upbeat US retail sales data, further collaborating to the upbeat tone in the spot.

Also, the widening US-Japanese 10-year bond yields favor the ongoing upside momentum, as it weighs negatively on the Japanese currency. The Japanese 10-year bond yields fell to a three-year low earlier today.

Markets now await the US Housing Starts, Building Permits and Michigan Consumer Sentiment Index to determine the next direction in the US dollar. Should the data disappoint, the recession fears are likely to resurface and could hit the risk sentiment once again.

USD/JPY Technical levels