USD/JPY recovers from session lows on risk rally, trades above 107.50

• USD/JPY continues to fluctuate in a tight range despite broad USD weakness.
• 10-year US Treasury bond yield rises more than 6%.
• Wall Street’s main indexes register strong gains on Tuesday.

The USD/JPY pair rose toward 108.00 during the Asian session but reversed its direction pressured by the heavy selling pressure surrounding the greenback.

After dropping to a daily low of 107.40, however, the pair staged a rebound in the second half of the day as the risk rally made it difficult for the JPY to find demand. As of writing, the pair was down 0.15% on the day at 107.55.

DXY slumps to multi-week lows

The US Dollar Index (DXY) closed the first day of the week flat and extended last week’s losses on Tuesday. The upbeat performance of major European currencies, as well as risk-sensitive antipodeans, forced the USD to lose interest. At the moment, the US Dollar Index is at its lowest level since early May at 98.90, losing 0.9% on a daily basis.

On the other hand, heightened hopes of the global economy recovering in the second half of the year amid easing coronavirus-related restrictions continue to boost the market sentiment. Major European equity indexes closed sharply higher on Tuesday and Wall Street opened the day on a strong footing following a three-day weekend.

While the Dow Jones Industrial Average is gaining 2.7% on the day, the 10-year US Treasury bond yield is up more than 6% on the day to confirm the positive mood.

Technical levels to watch for