USD/JPY inches higher toward 110 as US stocks hit fresh record highs

• US will reportedly remove 'currency manipulator' tag on China.
• DJIA hit fresh record high above 29K on upbeat mood.
• US Dollar Index turns flat on day below 97.50.

The USD/JPY pair ticked higher during the American session as the upbeat market mood made it difficult for the JPY to stay resilient against the greenback. As of writing, the pair was trading at its highest level since mid-May at 109.93.

Sentiment turns positive on Monday

On Monday, Bloomberg reported that the US will remove the 'currency manipulator' tag on China before signing the phase-one trade deal on Wednesday to allow risk-on flows to return to markets. After starting the day in a calm manner, Wall Street's main indexes gained traction in the last hour with the Dow Jones Industrial Average rising above 29K for the first time and the Nasdaq Composite and the S&P 500 both hitting fresh all-time highs.

Reflecting the upbeat market mood, the 10-year US Treasury bond yield is also rising more than 1%.

On the other hand, the lack of market interest on the greenback is not allowing the pair to test the critical 110 handle for the time being. The US Dollar Index, which advanced to 97.50 earlier in the day, turned flat at 97.35 during the American session and seems to be staying in a consolidation phase in that region.

The Japanese economic docket on Tuesday will feature Trade Balance, Bank Lending data and the Ecowatchers Survey on Tuesday.

Technical levels to watch for