USD/JPY clings to modest recovery gains, around mid-108.00s

• US-China trade deal hopes helped regain some traction on Friday.
• The technical set-up might have shifted in favour of bearish traders.
• Investors look forward to the US macro data for a fresh impetus.

The USD/JPY pair regained some positive traction on Friday and recovered a part of the previous session’s downfall to 1-1/2 week lows.
 
The pair stalled its recent pullback from multi-month lows, around mid-109.00s, and managed to attract some buying interest on the last trading day of the week amid receding demand for traditional safe-haven currencies – including the Japanese Yen.

Focus remains on trade developments

The overnight comments by the White House economic adviser Larry Kudlow, saying that there has been “very good progress,” and that a US-China trade agreement was close, revived hopes of an imminent US-China trade deal and boosted the global risk sentiment.
 
The risk-on mood was further evident from a strong pickup in the US Treasury bond yields, which extended some support to the US Dollar and further collaborated to the pair’s positive move for the first day in the past six trading session, back above mid-108.00s.
 
From a technical perspective, the pair on Thursday failed to defend a support marked by 2-1/2-month-old ascending trend-line. Hence, it remains to be seen if the pair is able to capitalize on the momentum or meets with some fresh supply at higher levels.
 
Moving ahead, Friday’s US economic docket – highlighting the release of monthly retail sales and some second-tier manufacturing data – might influence the USD price dynamics and produce some short-term trading opportunities later during the early North-American session.

Technical levels to watch