USD/JPY loses momentum ahead of 110, consolidates gains near 109.90

• 10-year US Treasury bond yield gains more than 1%.
• S&P 500 and Dow Jones futures are both up 0.3%. 
• US Dollar Index recovers Friday's losses, stays near 97.50.

The upbeat market mood at the start of the week made it difficult for the safe-haven JPY to find demand and helped the USD/JPY pair, which added nearly 150 pips last week, to continue to push higher. Although the pair seems to have lost its bullish momentum before testing the critical 110 handle, it continues to trade near 109.90, adding 0.4% on a daily basis.

Market sentiment turns positive on Monday

Hopes of the US and China quickly moving on to phase-two negotiations after signing the phase-one trade deal in Washington on Wednesday allow risk-on flows to dominate the markets. As of writing, the 10-year US Treasury bond yield is up more than 1% on the day and US stocks futures are pointing to a, yet another, opening at fresh all-time highs with the S&P 500 and the Dow Jones Industrial Average futures both rising 0.3% ahead of the opening bell.

There won't be any macroeconomic data releases from the US in the second half of the day and investors will stay focused on Wall Street's performance.

In the meantime, after closing the day 0.07% lower on Friday after the Nonfarm Payrolls growth in December fell short of the market expectation, the US Dollar Index recovered its losses and was last up 0.12% on the day at 97.46 to help the pair cling to its daily gains.

During the Asian session on Tuesday, Trade Balance, Bank Lending data and the Ecowatchers Survey from Japan will be looked upon for fresh impetus.

Technical levels to consider