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   “¢   A subdued USD price action fails to assist the pair to build on the positive momentum.
   “¢   Weaker European equities underpin JPY’s safe-haven status and exert some pressure.

The USD/JPY pair retreated around 20-pips from YTD tops, set earlier, but has still managed to hold with modest daily gains, just below mid-113.00s.

The pair quickly reversed the post-FOMC dip and regained strong traction on Thursday. Resurgent US Dollar demand, which got an additional boost from upbeat final US GDP print and durable goods orders data, turned out to be one of the key factors behind the pair’s overnight strong up-move.  

The positive momentum extended through the Asian session on Friday and seemed rather unaffected by slightly better-than-expected Tokyo core CPI, coming in at 1.0% y/y for September as against 0.9% recorded in the previous month.  

The pair touched an intraday high level of 113.64, the highest since December 12, albeit seemed losing momentum amid a subdued USD price action and a mildly softer tone around the US Treasury bond yields.  

Adding to this, the prevalent cautious mood around European equity markets, led by concerns over Italy’s budget proposal, underpinned the Japanese Yen’s safe-haven status and exerting some downward pressure.  

Market participants now look forward to a slew of second-tier US economic data, due for release later during the North-American session, for some fresh impetus on the last trading day of the week.  

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair could rise toward the large inverse head-and-shoulders neckline resistance, currently located around 126.50, in the next 12 months.”

“The bullish outlook would be invalidated if the pair finds acceptance below the previous month’s low of 109.76,” he adds further.