USD/JPY clings to gain above mid-108.00s, over 1-week high

• Improving risk sentiment was seen weighing on the JPY’s safe-haven status.
• A goodish bounce in the US bond yields helped ease the USD bearish pressure.
• BoJ Kuroda’s comments remained supportive; US-China trade war fears cap gains.

The USD/JPY pair built on the weekly bullish gap opening and climbed to over one-week tops during the Asian session, albeit lacked any strong follow-through.

With investors looking past Friday's disappointing US monthly jobs report, a combination of factors exerted some pressure on the Japanese Yen and led to a bullish gap opening at the start of a new trading week. 

The US President Donald Trump's announcement on Friday to suspend plans to impose tariffs on Mexico provided a strong boost to the global risk sentiment and dented the Japanese Yen's relative safe-haven status. 

Investors' appetite for perceived riskier assets got an additional boost following the release of mixed Chinese trade balance figures, showing that exports unexpectedly returned to growth in May despite higher US tariffs.

The risk-on mood was evident from a goodish rebound in the US Treasury bond yields, which extended some support to the US Dollar and remained supportive of the move beyond mid-108.00s.

The Japanese Yen was further weighed down by the BoJ Governor Haruhiko Kuroda's comments, saying that the central bank still has room for big stimulus, though fears of an extended US-China trade war kept a lid on any strong follow-through.

It would now be interesting to see if the pair is able to capitalize on the positive move or runs out of the steam at higher levels in absence of any relevant major market-moving economic releases from the US.

Technical levels to watch