USD/JPY claims 105.50, risk appetite riding high in early Tuesday

• Risk appetite sends Yen lower against the Greenback as trade war fears subside.
• Little data on the macro calendar until the mid-week with US GDP and Tokyo CPI.

The USD/JPY pair is holding on the high side following a risk-on US session, testing around 1.2450 heading into the Tokyo markets.

Market tensions around potential trade wars between the US and China got sent to the back burner in Monday's action, and the Yen receded broad-base as traders moved back into riskier assets, propelled by weekend statements from the US that there's potential that agreeable trade terms may be reached between China and Trump's administration.

The calendar is sparsely populated this week, with mid-tier speeches from various Fed members before the US GDP figures on Wednesday at 12:30 GMT. These are non-preliminary numbers for 2017's fourth quarter, so it's unlikely that the forecast 2.6% will be far off of the mark.

The Japanese side of the economic calendar is functionally empty until the Tokyo CPI late Thursday at 23:30 GMT. The Tokyo CPI acts as a precursor to the national figures, so traders will be watching this figure closely for clues about the inflationary efforts underway at the Bank of Japan (BoJ).

USD/JPY Levels to watch

The pair is pushing higher on healthy risk appetite, but downside risks remain in place as the overall bear trend is deeply entrenched, and resistance is heavy at February's swing low at the 106.00 major psychological level, and March's high of 107.30. Support is packed in tightly in this region near Friday's highs at 105.15 and the recent low of 104.65.