USD/JPY extends rebound, approaches 110.00 as US yields soar

• US dollar holds onto gains across the board.
• USD/JPY gains momentum amid improvement in risk sentiment and higher US yields.

The USD/JPY rose further and climbed to 109.95, reaching a fresh daily high. It had risen almost a hundred pips from Monday's low, boosted by a recovery in equity prices and higher US yields.

After a sharp decline on Monday, the Dow Jones is up by 1.83%, and the Nasdaq gains 1.55%. The 10-year yield stands at 1.21% after bottoming earlier on Tuesday at 1.12%. Higher yields contribute to the rally of USD/JPY. The Japanese yen is among the worst performer during the American session.

Short-term levels

The chart still shows the USD/JPY with a bearish bias but the rebound alleviated the pressure. A slide back under 109.40 would expose the recent low at 109.06 (July 19). Below, the next support stands at 108.50.

The recovery could face resistance at 110.00 and then 110.35. The 20-day moving average stands at 110.45. A daily close above 110.50 would negate the short-term negative bias.

Technical levels