USD/JPY consolidates just below 6-month tops, around mid-112.00s

   “¢   Fed rate hike prospects kept pushing the USD higher on Friday.
   “¢   JPY weighed down by easing US-China trade tensions/risk-on mood.
   “¢   Near-term overbought conditions prompt some profit-taking.

The USD/JPY pair surrendered early gains to fresh six-month lows and is currently placed at the lower end of its daily trading range.  

The pair kept pushing the pair higher for the fifth consecutive session on Friday and was supported by the prevailing bullish sentiment surrounding the US Dollar, which was now seen extracting support from firming Fed rate hike expectations.  

Meanwhile, a wave of risk-on trade, led by easing US-China trade tensions, was seen weighing on the Japanese Yen’s safe-haven appeal and further collaborated to the pair’s up-move to an intraday high level of 112.80, the highest since Jan. 9.  

Bulls, however, took a breather at higher levels and opted to lighten their positions amid near-term overbought conditions, especially a strong upsurge of nearly 150-pips since the beginning of this week.  

The latest leg of downtick over the past hour or so could be attributed to the latest US economic data, showing that import prices tumbled 0.4% m/m and marked its biggest drop since Feb. 2016.

Looking at the broader picture, today’s price action might still be seen as consolidative in nature and hence, dip-buying interest seems more likely to limit any meaningful correction, at least for the time being.

Technical levels to watch

Any subsequent slide is likely to find some fresh buying interest near the 112.00 handle, below which the pair is likely to accelerate the corrective slide back towards 111.40 resistance turned support.

On the upside, the 112.70-80 zone now seems to have emerged as an immediate resistance, which if cleared is likely to lift the pair beyond the 113.00 handle towards its next hurdle near 113.35 area.