USD/JPY sticks to gains near session tops, above mid-109.00s

• The risk-on impulse undermined the safe-haven JPY and assisted USD/JPY to regain traction.
• The BoJ monetary policy decision did little to provide any meaningful impetus to the major.
• The market focus remains glues to the outcome of a two-day FOMC meeting on Wednesday.

The USD/JPY pair built on its steady intraday ascent and climbed to fresh session tops, further beyond mid-109.00s heading into the European session.

The pair once again managed to find decent support and attract fresh buying near the 109.10 region on Wednesday amid the risk-on impulse. Struggling property giant China Evergrande said it would make an upcoming bond coupon and eased immediate fears of a messy corporate collapse. This, in turn, boosted the global risk sentiment, which undermined the safe-haven Japanese yen and provided a goodish lift to the USD/JPY pair.

The JPY was further weighed down by the Bank of Japan's (BoJ) willingness to maintain its ultra-easy monetary policy stance amid the economic slowdown caused by the coronavirus pandemic. Earlier the Japanese central bank left its benchmark interest rates and the target for the 10-year JGB unchanged at -0.1% and around zero, respectively. The BoJ also reiterated that it would purchase JGBs without an upper limit.

On the other hand, the US dollar continued drawing some support from expectations for an imminent Fed taper announcement and a modest uptick in the US Treasury bond yields. Hence, the market focus will remain glued to the outcome of a two-day FOMC meeting. The Fed is scheduled to announce its decision later during the US session this Wednesday and investors will look for fresh clues about the likely timing of the tapering plan.

Apart from this, the latest economic projections, especially the so-called dot plot, will play a key role in influencing the near-term USD price dynamics. This, along with the broader market risk sentiment, should assist investors to determine the next leg of a directional move for the USD/JPY pair.

Technical levels to watch