USD/JPY extends gains above 107.00, holds above key technical level

• USD rises further as US-China tensions ease. 
• Higher US yields weigh on the demand for the yen. 

USD/JPY rose further during the US session. It gained momentum after breaking clearly above 107.00. It printed a fresh 5-week high at 107.48. The rally found resistance at 107.50 and pulled back modestly. It was trading at 107.40, posting a gain of around 60 pips. 

Yesterday USD/JPY bottomed at 105.99 following the announcement of tariffs on US imports. Later that day, comments from US officials about the willingness to talk with China eased concerns and equity price rebounded. The rally continued today and boosted USD/JPY further. The DOW JONES was up 0.72% and the NASDAQ 0.30%. In the bond market, the 10-year yield rose to 2.83%, the highest in a week. 

Levels to watch 

The pair is rising for the third-day in-a-row, headed toward the highest close since February 21. From a technical perspective, price climbed above the 107.00 area that capped the upside during the previous five weeks. A consolidation around current levels is likely to support more gains. 

To the upside, resistance level might be seen at 107.50 (daily high), 107.90 (Feb 21 high), 108.00 and 108.25 (Jan low). On the downside, supports could be located at 107.15 (European session high),  106.70 (daily low) and 106.35/40.