USD/JPY clings to gains near 50-DMA, below 108.00 mark

• USD/JPY caught some fresh bids on Thursday amid a modest pickup in the USD demand.
• The uptick seemed unaffected by softer risk sentiment and worsening US-China relations.
• Investors now look forward to the US macro data for some impetus ahead of BoJ on Friday.

The USD/JPY pair regained positive traction on Thursday and reversed the previous day’s modest slide. The pair was last seen trading near the top end of its daily trading range, around the 107.75-80 region, with bulls making a fresh attempt to build on the momentum further beyond 50-day SMA.

Despite Wednesday’s dovish sounding FOMC meeting minutes, the US dollar managed to find some buying interest and recovered a part of its recent losses. A stronger greenback was seen as one of the key factors driving the USD/JPY pair higher through the early European session on Thursday.

Meanwhile, investors seemed convinced that the Bank of Japan might introduce extraordinary policy easing measures at an unscheduled meeting on Friday. This coupled with a larger-than-expected rise in the Japanese trade deficit for April – led by a 21.9% fall in the country’s exports – further took its toll on the domestic currency.

The USD/JPY pair moved back closer to over one-month tops set on Tuesday and seemed rather unaffected by concerns over worsening US-China relations. In the latest development, the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges.

Risk of a further escalation in disputes between the world’s two largest economies weighed on investors sentiment and was evident from a weaker tone surrounding the global equity markets. Bulls, however, shrugged off the softer risk tone, instead took cues from a goodish pickup in the USD demand.

Moving ahead, market participants now look forward to the US economic docket, featuring the releases of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI. The data might provide some impetus later during the early North American session and assist traders to grab some short-term opportunities ahead of the BoJ on Friday.

Technical levels to watch