USD/JPY spikes back above mid-106.00s, closer to multi-day tops

   •  Resurgent USD demand helps build on overnight modest gains. 
   •  Risk-on mood/rising US bond yields provide an additional boost. 
   •  Focus remains on the latest FOMC monetary policy update.

The USD/JPY pair quickly reversed an early European session dip to the 106.00 neighborhood and might now be headed towards the top end of its daily trading range. 

A fresh wave of US Dollar buying interest, supported by a goodish pickup in the US Treasury bond yields, was seen as one of the key factors behind the pair's latest leg of sharp up-move of over 40-pips.

Adding to this, a positive trading sentiment around European equity markets, pointing to a slight improvement in investors’ appetite for riskier assets, weighed on the Japanese Yen's safe-haven appeal and further collaborated to the pair's momentum back above mid-106.00s.

In absence of any major market moving economic releases, the USD price dynamics and the broader market risk sentiment might continue to act as key determinants of the pair's momentum. 

Meanwhile, repositioning trade, ahead of the next big event risk - the highly anticipated FOMC decision, might continue to infuse some volatility around the major, with a follow-through up-move, led by some fresh short-covering, now seems a distinct possibility.

Technical levels to watch

On a sustained move above 106.65-70 area, the pair seems all set to aim towards reclaiming the 107.00 handle before eventually darting towards 107.30-40 supply zone. On the flip side, weakness back below 106.30 level might continue to find some support near the 106.00 handle, which if broken would turn the pair vulnerable to slide further towards 105.50 important support.