- USD/JPY pair regains traction amid fading safe-haven demand.
- A subdued USD price action might keep a lid on any strong gains.
- Traders now eye US economic data for some meaningful impetus.
The USD/JPY pair regained some positive traction on Tuesday, with bulls now looking to extend the momentum further beyond the 109.00 round-figure mark.
Despite concerns about the economic impact of a deadly coronavirus in China, a sharp turnaround in the global risk sentiment undermined the Japanese yen’s safe-haven demand and helped the pair to recover further from three-week lows set in the previous session.
The upside seems limited
Bullish traders further took cues from a modest uptick in the US Treasury bond yields. However, though a subdued US dollar price action did little to provide any additional boost and might turn out to be the only factor keeping a lid on any strong recovery for the major.
The greenback remained on the back foot in the wake of a surprise fall in new home sales, which dropped 0.4% to a seasonally adjusted annual rate of 694,000 units in December and missed consensus estimates by a big margin – pointing to rise by 1.5%.
Currently hovering around the 109.10 region, session tops, traders are likely to wait for some strong follow-through buying beyond the very important 50-day SMA, around the 109.20 region, before positioning for any further near-term appreciating move.
Moving ahead, Tuesday’s US economic docket – highlighting the release of Durable Goods Orders and the Conference Board’s Consumer Confidence Index – will now be looked upon for some short-term trading impetus later during the early North-American session.
Technical levels to watch