USD/JPY sits near 2-month tops, comfortably above 109.00 handle

• The post-FOMC USD upsurge helped break through the recent trading range.
• The positive move seemed rather unaffected by weaker global risk sentiment.
• Traders now eye US ISM PMI for some impetus ahead of Friday’s US jobs report.

The USD/JPY pair built on the post-FOMC positive move and rallied further beyond the 109.00 handle, hitting two-month tops on Thursday.

As was widely expected, the Fed lowered its benchmark interest rate by 25 bps for the first time since December 2008 but signalled that more rate cuts are not guaranteed. The lack of commitment further easing forced investors to scale back expectations of another rate cut in September and provided an additional boost to the recent US Dollar bullish run.

The positive momentum seemed rather unimpressed by a slight deterioration in the global risk sentiment, which tends to underpin the Japanese Yen’s safe-haven demand. Against the backdrop of the Fed’s hawkish rate cut, the fact that US-China trade negotiations concluded without a major breakthrough now seemed weighing on investors’ appetite for perceived riskier assets.

Meanwhile, the upsurge helped the pair to finally break out of a four-day-old trading range, setting the stage for a further near-term appreciating move as market participants now look forward to the US economic docket – highlighting the release of ISM Manufacturing PMI later during the early North-American session, for a fresh bullish impetus.

The key focus, however, will remain on Friday’s closely watched US monthly jobs report – popularly known as NFP, which should now act as the next catalyst and help investors determine the pair’s next leg of a directional move.  

Technical levels to watch