USD/JPY clings to gains near multi-day tops, eyeing to reclaim 110.00 mark

• USD/JPY gained positive traction for the second consecutive session on Friday.
• The risk-on mood undermined the safe-haven JPY and remained supportive.
• Hawkish Fed expectations support prospects for a further appreciating move.

The USD/JPY pair maintained its bid tone through the early European session, with bulls now awaiting a sustained move back above the key 110.00 psychological mark.

The pair built on the previous day's positive move and gained some follow-through traction on the last trading day of the week. A generally positive tone around the equity markets undermined demand for the safe-haven Japanese yen and pushed the USD/JPY pair for the second successive session. That said, a modest US dollar pullback from three-week tops failed to impress bulls, or provide any additional boost to the major, at least for now.

Meanwhile, Thursday's upbeat US Retail Sales figures underscored consumer confidence and pointed to the continuation of economic recovery. This, in turn, reinforced market expectations that the Fed would begin rolling back its massive pandemic-era stimulus sooner than later. This should continue to act as a tailwind for the greenback and supports prospects for a further near-term appreciating move for the USD/JPY pair.

Some follow-through strength beyond the 110.00 mark will reaffirm the positive outlook and push the USD/JPY pair toward the 110.25-30 supply zone, en-route monthly swing highs, around the 110.45 region. Market participants now look forward to the release of the Prelim Michigan US Consumer Sentiment Index, due later during the early North American session. The data might influence the USD and provide some impetus to the major.

Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the USD/JPY pair. The key focus, however, will be on the upcoming FOMC monetary policy meeting on September 20-21. The outcome will play a key role in driving the greenback in the near term and assist investors to determine the next leg of a directional move for the pair.

Technical levels to watch