USD/JPY gains further beyond 110.00 handle amid risk-on mood

The USD/JPY pair caught some fresh bids on Tuesday and recovered around 50% of previous session's losses to move back above the key 110.00 psychological mark.

A slight improvement in investors' risk-appetite, as depicted by positive trading sentiment around European equity markets, added on to disappointing Japanese data-led selling pressure around the Japanese Yen. The Japanese Business Sentiment Index (BSI), released by the Ministry of Finance, dropped to -2.9 during second quarter of 2017 as compared to a positive reading of 1.3 reported in the first quarter. 

Subdued action around the US treasury bond yields, failing to underpin the US Dollar demand, did little to extend any additional support to the pair's up-move to session tops near 110.20-25 region. Hence, it would now be interesting to see it traders continue to drive the pair higher or use the current up-move as an opportunity to lighten their positions ahead of this week's important event risks - FOMC decision on Wednesday and BoJ monetary policy announcement during Asian session on Thursday.

Apart from the broader market risk sentiment, today's US economic data - PPI print for May, would be also be looked upon to determine the pair's movement through Tuesday's trading session.

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Technical levels to watch

Bulls would be eyeing for a strong follow through buying interest beyond 110.30-35 immediate resistance, above which the pair is likely to dart towards 110.75-80 resistance en-route the 111.00 handle.

On the downside, 110.00-109.90 zone now becomes immediate support to defend, which if broken might drag the pair back towards 109.65 area (yesterday's low) ahead of 109.40-35 important horizontal support.