USD/JPY clings to gains near 2-week tops, just above mid-111.00s
• JPY weighed down by renewed optimism over US-China trade talks.
• A fresh leg of an upsurge in the US bond yields remained supportive.
• The USD remains on the defensive and might cap any further gains.
The USD/JPY pair regained positive traction on Wednesday and is currently placed at fresh two-week tops, around the 111.55 region.
The pair quickly reversed an Asian session dip to the 111.20 region, rather caught some aggressive bids and finally broke out its overnight consolidative trading range on reports the US and China are moving closer to a trade deal.
According to the Financial Times, the top US and Chinese officials have resolved most of the issues blocking the long-awaited trade deal and eventually dented the Japanese Yen's safe-haven status against its US counterpart.
The risk-on mood was evident from a fresh leg of an upsurge in the US Treasury bond yields, which remained supportive of the positive momentum, though was partly offset by some renewed greenback selling bias.
The US Dollar held on the defensive through the Asian session on Wednesday and was being weighed down by yesterday's mixed US economic data, showing that durable goods orders contracted by 1.6% in February.
It would now be interesting to see if the pair is able to capitalize on the bullish move or runs out of the steam at higher levels as market participants now look forward to a duo of US macro reports for some fresh impetus.
Today's US economic docket highlights the release of ADP report on private sector employment and ISM non-manufacturing PMI, which will play an important role in driving the pair's momentum ahead of Friday's NFP.
Technical levels to watch
Immediate resistance is pegged near the 111.65-70 region, above which the pair seems all set to aim towards reclaiming the 112.00 round figure mark. On the flip side, the 111.30-20 region now becomes immediate support to defend, which is followed by the 111.00 handle and support near the 110.80 horizontal zone.