From a technical perspective, the pair is keeping more bullish with price action resting just above the 110.00 handle to start the European morning.
Buyers are getting more comfortable in taking out exporter offers but all the enthusiasm looks to be caused by the run up to the US-China Phase One trade deal signing.
Looking at the chart, further resistance is only seen closer towards 110.50-67 next it sure feels like buyers have much to do in order to stretch gains from hereon.
The real worry for yen pairs is that we may start to see a sell-the-fact play upon the conclusion of the US-China Phase One trade deal. That applies largely to risk trades and there's a more compelling case for US stocks after hitting all-time highs once again overnight.
Not to mention that once we get through the US-China Phase One trade deal, where exactly should market participants look towards for more optimism?
Global growth remains sluggish and if anything else, perhaps there is even a US-EU trade dispute to look forward to in the coming months. Just be wary that EU trade commissioner Phil Hogan is in Washington for trade talks on 14-16 January this week too.
Earnings season beckons on Wall St but at this stage, can earnings match up to valuations as stocks continue to keep running higher and higher? That will be a serious question for investors not just this quarter, but surely in the subsequent quarters as well.
Back to USD/JPY, if price can keep above the 110.00 handle, perhaps it can open up a new range for the pair between 110 and 112 in the near-term. But as mentioned above, watch out for a potential sell-the-fact play on risk in the week(s) ahead.
I would argue the risk for buyers now rest around 109.60-70 whereby a firm drop below that would bring back the previous range for the pair moving forward.