USD/JPY clings to small daily gains above 109.30 as risk rally loses momentum

• 10-year US Treasury bond yield is consolidating Thursday's gains.
• US Dollar Index clings to this week's gains above 98.
• Focus will remain on US-China trade headlines amid an empty economic calendar.

The USD/JPY pair capitalized on the upbeat market mood on Thursday and climbed to its highest level since late May at 109.49 but has gone into a consolidation phase on Friday. As of writing, the pair was trading at 109.35, adding 0.07% on a daily basis.

JPY struggles to find demand as a safe haven

Reports of China and the United States agreeing to roll back tariffs as part of the phase-one of the trade deal provided a boost to the risk sentiment. Heightening the expectations of a trade deal to be announced soon, a White House spokesperson told Fox News on Thursday that they were 'very optimism' a deal will be finalized with China soon.

The 10-year US Treasury bond yield closed the day with daily gain of more than 5% after rising as much as 7% on Thursday, and Wall Street's main indexes hit fresh all-time highs.

With the lack of significant developments surrounding the US-China trade dispute on Friday, the market action turned subdued and paved the way for consolidation. In the second half of the day, Wholesale Inventories and the University of Michigan's Consumer Sentiment Survey from the United States will be looked upon for fresh impetus but the market's risk perception is likely to dominate the pair's movements ahead of the weekend. Ahead of these data releases, the US Dollar Index is up 0.08% on the day at 98.20.

Technical levels to consider