USD/JPY surges to 3-week tops, further beyond 110.00 mark

• The prevailing risk-on mood continues to weigh on the JPY’s safe-haven status.
• A strong pickup in the US bond yields, stronger USD provided an additional boost.
• USD/JPY now seems poised to aim towards testing yearly tops, around 110.30.

The USD/JPY pair caught some fresh bids during the early European session on Wednesday and jumped to three-week tops, levels just above the key 110.00 psychological mark.

Following the previous session's intraday pullback and a brief consolidation through the early part of Wednesday's trading session, the pair managed to regain some positive traction. The buying interest picked up some additional pace in the last hour and was being supported by the prevailing risk-on mood.

Despite concerns over the economic impact of the deadly coronavirus, a slowdown in the rate of spread and the expected new round of economic stimulus measures by China continued boosting investors' sentiment. This eventually dented the Japanese yen's perceived safe-haven status and remained supportive.

Bullish traders further took cues from a goodish intraday rally in the US Treasury bond yields, which provided an additional boost to the already stronger US dollar and further contributed to the strong bid tone surrounding the major.

Meanwhile, the latest leg of a sudden pickup could further be attributed to some technical buying above the 109.95-110.00 supply zone. Hence, some follow-through strength, back towards yearly swing lows near the 110.30 region, now looks a distinct possibility.

Technical levels to watch