USD/JPY clings to strong gains above mid-109.00s ahead of US ISM PMI

   •  USD jumps to fresh multi-month tops, underpinned by surging US bond yields.
   •  Easing geopolitical tensions/fading safe-haven demand supportive of the up-move.
   •  Traders await US ISM PMI for some impetus ahead of the Fed and NFP.

The USD/JPY pair built on its bullish momentum through the mid-European session on Tuesday and rose to over 2-1/2 month tops in the last hour.

The prevalent broad-based greenback strength, with the key US Dollar Index rising beyond the 92.00 handle to fresh multi-month highs, has been one of the key factors driving the pair higher. 

Bulls also seemed to track resurgent US Treasury bond yields and the latest positive geopolitical developments in the Korean peninsula, which was seen weighing on the Japanese Yen's safe-haven demand. 

With today's up-move, the pair has finally broken out of a three-day-old trading range as market participants now look forward to the US ISM manufacturing PMI for some fresh impetus. 

Looking at the broader picture, rising speculations over a steeper monetary policy tightening cycle by the Fed might continue to underpin the USD demand, with bulls now targeting a move towards reclaiming the key 110.00 psychological mark.

The Fed is scheduled to announce the outcome of a two-day meeting on Wednesday, which along with Friday's keenly watched US non-farm payrolls data should help investors determine the pair's next leg of directional move.

Technical levels to watch

Momentum beyond 109.75 level now seems to pave the way for an extension of the pair’s up-move towards the 110.00 handle en-route the very important 200-day SMA barrier near the 110.20-25 region.

On the flip side, the 109.45 level now seems to protect the immediate downside, which if broken might drag the pair back towards challenging the 109.00 round figure mark support.