USD/JPY holds steady above mid-108.00s

• Trade optimism weighed on the JPY’s safe-haven status and helped gain some traction.
• Some follow-through uptick in the US bond yields failed to revive the USD buying interest.
• The pair seems more likely to extend the sideways move ahead of the next FOMC meeting.

The USD/JPY pair failed to capitalize on the early uptick to multi-day tops and is currently placed at the lower end of its daily trading range, just above mid-108.00s.
 
The pair gained some follow-through traction during the early Asian session on Tuesday and added to the previous session’s modest positive move amid signs of progress over a possible resolution of the prolonged US-China trade disputes.

Subdued USD demand capping gains

In the latest development, the US President Donald Trump on Monday said that the trade deal with China was coming along great and that he hopes to sign a deal with China at the Chile APEC summit, scheduled next November.
 
Adding to this, White House adviser Larry Kudlow said that tariffs scheduled for December could be withdrawn if progress is made, which dented the Japanese Yen’s safe-haven demand and provided a minor lift to the pair.
 
Bullish traders further took cues from a positive tone around the US Treasury bond yields, albeit a subdued US Dollar demand failed to provide any meaningful impetus and kept a lid on the pair’s attempted positive move.
 
The Greenback remained depressed amid firming market expectations that the Fed will cut interest rates further at its upcoming monetary policy meeting on October 29-30 and might continue to cap any further gains, at least for now.
 
In absence of any major market-moving economic releases from the US, the pair seems more likely to continue with its range-bound trading action and remains at the mercy of broader market risk sentiment/the USD price dynamics.

Technical levels to watch