USD/JPY surrenders early gains to 2-month tops, retreats farther below 109.00 handle

• The USD extends post-FOMC upsurge to hit two-year tops, though failed to impress bulls.
• Cautious mood benefitted the JPY’s safe-haven status and exerts some downward pressure.
• Mostly in line US weekly jobless claims did little to provide any impetus ahead of ISM PMI.

The USD/JPY pair surrendered a major part of its early gains to two-month tops and is currently placed at the lower end of its daily trading range, around 108.80-75 region.  

The pair initially built on the previous session’s post-FOMC up-move and was supported by a strong follow-through US Dollar upsurge to two-year tops. The USD got an additional boost from a goodish pickup in the US Treasury bond yields, albeit failed to impress bulls or assist the pair to preserve early gains.  

The prevalent cautious mood, as depicted by a subdued action around equity markets, benefitted the Japanese Yen’s relative safe-haven status against its American counterpart and turned out to be one of the key factors behind the pair’s slide of nearly 50-pips from an intraday high level of 109.32.

On the economic data front, the US initial weekly jobless claims came in at 215K for the week ended July 26, up from the previous week’s reading of 206K. The rise was on expected lines – 214 consensus estimates, and hence, did little to provide any meaningful impetus.

Thursday’s US economic docket also features the key release of ISM manufacturing PMI, which will now be looked upon for some short-term trading opportunities. The key focus, however, will remain on Friday’s closely watched US monthly jobs report – popularly known as NFP.

Technical levels to watch