The USD/JPY pair edged higher through the early European session and climbed to fresh daily tops, around the 109.80 level in the last hour. Following the previous day's pullback of around 35 pips from the vicinity of weekly tops, the pair regained positive traction on Thursday and was supported by a combination of factors. Concerns that the recent rise in COVID-19 cases could hinder Japan's fragile economic recovery acted as a headwind for the Japanese. In the latest development, Japan extended a state of emergency in Tokyo and eight other prefectures by about 3 weeks to June 20.

On the other hand, the US dollar found some support from a goodish pickup in the US Treasury bond yields. This was seen as another factor that contributed to the bid tone surrounding the USD/JPY pair. Investors have grown nervous about whether a surprisingly stronger US economic data could force the Fed to raise interest rates sooner rather than later. This, in turn, prompted some unwinding of the USD bearish bets ahead of Friday's release of the NFP report. Meanwhile, a softer tone surrounding the equity markets might extend some support to the safe-haven JPY. This, in turn, might turn out to be the only factor capping gains for the USD/JPY pair, at least for the time being. Hence, it will be prudent to wait for some strong follow-through buying, possibly beyond the key 110.00 psychological mark, before positioning for any further appreciating move.