USD/JPY spikes to fresh session tops, around mid-111.00s

   “¢   A goodish pickup in the USD demand helps regain positive traction.
   “¢   Risk-on mood weighs on JPY and remains supportive of the momentum.

The USD/JPY pair quickly reversed an early European session dip to 111.20 area and spiked to fresh session tops in the last hour.

The US Dollar continued scaling higher at the start of a new trading week and was seen as one of the key factors that helped the pair to hold above Friday’s swing low level of 111.10, touched in the aftermath of disappointing headline NFP print.

The July monthly jobs report showed that the US economy added 157K new jobs but the negative reading was largely negated by an upward revision job gains for May and June and in-line hourly wage growth data, which reinforced Fed rate hike expectations and underpinned the greenback.  

Adding to this, a goodish rebound in European equity markets, pointing to a slight improvement in risk appetite, weighed on the Japanese Yen’s safe-haven appeal and further collaborated to the pair’s latest leg of a sharp spike of around 25-30 pips.

Currently placed at session tops, around the 111.45 region, a sudden pickup in demand,  over the past hour or so,  could also be attributed to some technical buying/short-covering from a short-term ascending trend-line support on the 15-min chart.

It would now be interesting to see if the current bounce back marks the end of last week’s retracement slide from levels beyond the 112.00 handle or is looked upon as an opportunity to initiate some fresh short positions amid absent market moving economic releases.

Technical levels to watch

Immediate resistance is pegged near the 111.85 region, above which the pair is likely to surpass the 112.00 handle, and last week’s swing high, around the 112.15 area, and aim towards challenging the 112.80-85 supply zone.  

On the flip side, the 111.20-10 area now becomes an immediate support to defend, which if broken might turn the pair vulnerable to slide back below the 111.00 handle and head towards testing an important support near the 110.70-60 region.