“¢ Risk-on mood denting JPY’s safe-haven demand and helps find some support.
“¢ The prevalent USD selling bias keeps a lid on any strong positive momentum.
“¢ US NFP report to play an important role in determining the near-term trajectory.
The USD/JPY pair struggled to build on its intraday positive move and quickly retreated over 25-pips from session high level of 113.10.
The pair stalled this week’s retracement slide from over three-week tops, set on Wednesday, and staged a modest recovery amid the prevalent risk-on mood.
The latest optimism over a possible solution to the US-China trade tensions boosted investors’ appetite for riskier assets and weighed on the Japanese Yen’s safe-haven status.
This coupled with a modest uptick in the US Treasury bond yields helped find some support at lower levels, albeit the ongoing US Dollar corrective slide kept a lid on any follow-through up-move.
Despite a combination of supporting factors, traders seemed reluctant to initiate any fresh bullish positions and preferred to wait on the sidelines ahead of the keenly watched US monthly jobs report.
Apart from the headline NFP print, wage growth data will influence Fed rate hike expectations for December and beyond, which might eventually help determine the pair’s next leg of directional move.
Technical levels to watch
The 113.00-113.10 region might continue to act as an immediate resistance, above which the pair is likely to aim towards the 113.35-40 supply zone before eventually darting towards reclaiming the 114.00 handle. On the flip side, weakness below the 112.55-50 immediate support now seems to accelerate the fall further towards the 112.25 horizontal level en-route the 112.00 handle.
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