USD/JPY rebounds to fresh highs near 108.30 amid improved risk tones

• Recovers in tandem with Treasury yields, S&P 500 futures amid improved risk tones.
• Upside could lack momentum amid softer USD, ahead of US ADP, ISM services.

The USD/JPY pair reversed a quick dip below the 108 handle and went on to hit fresh daily tops at 108.30 levels, tracking the renewed uptick in the US Treasury yields and S&P 500 futures amid improved risk appetite towards the risk assets.

The risk sentiment somewhat improved in the European trading after the Eurozone as well as the German final services PMI came in upbeat and eased growing fears over the bloc’s economic slowdown. Further, the European equities cheered the dovish tilt delivered by the Fed Chair Powell in his speech a day before.

Despite the latest leg up, further upside in the spot appears limited amid persisting broad US dollar weakness, led by increased odds of Fed rate cuts this year after Powell dropped his patience stance and hinted at probable rate cuts in the coming months.

All eyes now remain on the US ADP jobs and US ISM services PMI reports fresh direction on the greenback while the Fed Vice President Clarida’s speech will also hog the limelight.

Technical levels to watch