USD/JPY climbs to session tops, around 109.75

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   •  Fading safe-haven/dismal PMI weigh on JPY and helped regain traction.
   •  A modest USD uptick offset weaker US bond yields and remains supportive.
   •  A combination of factors might continue to keep a lid on any runaway rally.

The USD/JPY pair caught some fresh bids on Thursday and is currently placed at the top end of its daily trading range, around the 109.70-75 region.

Having faced rejection near the key 110.00 psychological mark in the previous session, a combination of supporting factors helped the pair to regain some positive traction for the second consecutive session.

Initial signs of stability returning back to the global financial markets, especially after the overnight volatile swing in the US equity markets, dented the Japanese Yen’s relative safe-haven status and provided a minor boost.

The Japanese Yen was further weighed down by today’s disappointing release of Markit flash manufacturing PMI, which fell to 50.0 in January from an upwardly revised reading of 52.6 recorded in the previous month.

This coupled with a modest uptick in the US Dollar extended some additional support and remained supportive, though was partly offset by a weaker tone around the US Treasury bond yields and kept a lid on any runaway rally.

Adding to this, the partial US government shutdown, yet-unresolved US-China trade dispute and dovish Fed expectations might further collaborate towards capping any meaningful up-move, at least for the time being.

Technical levels to watch

The 110.00 handle might continue to act as an immediate resistance, above which the pair is likely to head towards challenging the 110.30 horizontal zone before eventually aiming to reclaim the 111.00 round figure mark.

On the flip side, the 109.40 region now seems to have emerged as immediate support, which if broken might turn the pair vulnerable to break below the 109.00 handle and test its next support near the 108.70 level.
 

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