USD/JPY jumps to over 1-month tops and retreats, now steady below 108.00 mark

• USD/JPY continued scaling higher through the early North American session on Tuesday.
• The momentum was supported by speculations about further policy easing by the BoJ.
• Sustained USD weakness, worsening US-China trade relations capped any further gains.

The USD/JPY pair spiked to levels beyond the 108.00 mark, or over one-month tops in the last hour, albeit quickly retreated few pips thereafter.

The latest optimism over encouraging data on coronavirus vaccine trial weighed heavily on the safe-haven Japanese yen and assisted the pair to gain some follow-through traction for the second straight session on Tuesday.

The intraday selling around the JPY picked up additional pace after the Bank of Japan (BoJ) called for an unscheduled meeting on Friday, which fueled speculations about more extraordinary policy easing measures.

The strong positive momentum lifted the USD/JPY pair to the highest level since April 13. Bulls, however, struggled to find acceptance above the 108.00 mark amid growing concerns over worsening US-China relations.

This coupled with fears about the second wave of coronavirus infections further collaborated towards capping the USD/JPY pair. Meanwhile, a weaker opening in the US equity markets led to a sudden fall of around 25-30 pips in the last hour.

The intraday pullback found some support near the 107.80 region as investors await a fresh catalyst from the Fed Chair Jerome Powell and the US Treasury Secretary Steven Mnuchin’s congressional testimony.

Technical levels to watch