USD/JPY climbs to 109.75 ahead of US new home sales data

A slight improvement in global risk sentiment, as depicted a sharp recovery in European equity markets, dented the perceived safe-haven appeal for the Japanese currency and boosted the USD/JPY to session peak level of 109.75.

Of late, moves in the USD/JPY pair have been driven by the sentiment surrounding equity markets and the correlation dominated the pair's move on Tuesday as well. During Asian trading session, the pair dropped 109.17 on weak equities but as day progressed and as the European equities extended their strength, the pair regained some of its lost ground on Monday to currently trade within striking distance of 110.00 psychological mark.

Traders would now look forward to today's only release from the US, new home sales data for the month of April, in order to confirm extension of the pair's ongoing upward trajectory.

Technical levels to watch

From current levels, 50-day SMA region near 110.00 psychological mark remains immediate resistance level, which if conquered sets the stage for further appreciating move, initially towards recent highs resistance near 110.55-60 resistance and eventually beyond 111.00 round figure mark to 111.15-20 strong resistance.

Meanwhile on the downside, 109.00 round figure mark now seems to have emerged as immediate support, below which the pair is likely to extend its downward trajectory initially towards 108.60 intermediate support and eventually towards 20-day SMA strong support near 108.40-35 region.