USD/JPY clings to modest intraday gains near two-day high, just above 114.00 mark

• USD/JPY moved into the positive territory for the second successive day on Tuesday.
• Rebounding US bond yields underpinned the USD and extended support to the pair.
• A positive tone around the European equity markets weighed on the safe-haven JPY.

The USD/JPY pair climbed back above the 114.00 mark during the first half of the European session and was last seen trading near a two-day high.

A combination of supporting factors assisted the USD/JPY pair to attract some dip-buying near the 113.65 area on Tuesday and turn positive for the second successive day. The US dollar continued drawing support from expectations that the Fed will tighten its monetary policy at a faster pace than expected.

In fact, the markets seem convinced about an eventual Fed lift-off in March and have been pricing in a total of four rate hikes in 2022. Bulls further took cues from a goodish rebound in the US Treasury bond yields, which was seen as another factor that underpinned the buck and extended some support to the USD/JPY pair.

Meanwhile, the latest leg up witnessed over the past hour or so could be attributed to a positive tone around the European equity markets, which tends to weigh on the safe-haven Japanese yen. Bulls now await some follow-through buying beyond the 200-hour SMA before positioning for any further intraday appreciating move.

Market participants now look forward to the release of the Conference Board's US Consumer Confidence Index for some impetus during the early North American session. This, along with the US bond yields, will influence the USD. Apart from this, the broader market risk sentiment should provide some impetus to the USD/JPY pair.

Technical levels to watch