USD/JPY rebounds to 105.70 as risk-on remains at full steam

• Increasing risk appetite triggers fresh Yen selling.
• A notable USD demand helps the USD/JPY comeback.

The USD/JPY pair staged a solid comeback in the European session, rapidly recovering 25-pips in response to the aggressive buying seen in the US dollar versus its main competitors. Easing global trade concerns, especially between the US and China, revived the demand for the US currency.

Meanwhile, the risk-on market profile persists at full steam, reflected by the rally in the global stock markets, higher Treasury yields and higher oil prices, which usually diminishes the safe-haven bids for the Yen.

Despite the renewed uptick, the bulls are seen holding back, as markets digest the latest remarks from the FOMC member Bostic, citing that the fiscal policy is creating more uncertainty for the Fed.

Looking ahead, the pair will continue to track the broad market sentiment and USD dynamics ahead of the US CB consumer confidence data release.

USD/JPY levels to watch

FXStreet’s Analyst Omkar Godbole notes, “The pair created a "bullish outside-day candle" yesterday, as it rose from 104.63 to 105.48. Also, the spot extended gains further to 105.75 in Asia as the S&P 500 index strengthened 10 points or 0.40 percent. A positive close today, preferably above the 10-day moving average of 105.82, would confirm a temporary low is in place at 104.63 and could signal consolidation with a positive bias. That said, only a weekly close above 106.20 would abort the bearish view.”