USD/JPY eases from 3-week tops, still well bid near 106.80-85 region

• USD/JPY continued gaining traction for the fourth consecutive session on Wednesday.
• The upbeat market mood undermined the safe-haven JPY and remained supportive.
• The emergence of some fresh USD selling kept a lid on any strong gains for the major.

The USD/JPY pair maintained its bid tone through the early North American session, albeit has retreated around 20 pips from three-week tops set earlier this Wednesday.

The pair added to this week's positive move and gained some follow-through traction for the fourth consecutive session on Wednesday. The uptick was sponsored by the prevalent risk-on mood, which tends to undermine the Japanese yen's safe-haven demand.

The global risk sentiment remained well supported by the optimism over a vaccine for the highly contagious coronavirus diseases and hopes of a US economic recovery. Bulls further took cues from some strong follow-through pickup in the US Treasury bond yields.

However, the impasse over the next round of the US fiscal stimulus led to some fresh selling around the US dollar and capped the USD/JPY pair near the 107.00 mark. The USD remained depressed despite Wednesday's hotter-than-expected US consumer inflation figures.

Meanwhile, the pair's inability to capitalize on the move warrants some caution for bullish traders and makes it prudent to wait for some strong follow-through buying before positioning for any further appreciating move.

Technical levels to watch