USD/JPY flirting with session tops, now eyeing mid-109.00s

The USD/JPY pair attracted some fresh bids at lower levels and has now recovered around 40-45 pips from sub-109.00 level, closer to 4-month lows struck last week.

Currently placed at session tops, around the 109.30-35 region, today's up-move is being supported by a modest pickup in the US Dollar demand. The greenback managed to rebound after overnight losses led by the US President Donald Trump's threat to shut down the government and warning to pull out of the North American Free Trade Agreement with Mexico and Canada.

Adding to this, some signs of stability returning back to the global financial market, reinforced by an uptick in the US Treasury bond yields, were also seen weighing on the Japanese Yen's safe-haven appeal and further collaborated to the pair's recovery move through early European session.

Later during the NA session, the release of weekly jobless claims and existing home sales data from the US would now be looked upon for some fresh trading impetus. The key focus, however, would remain on the Jackson Hole Symposium, where the Fed Chair Janet Yellen's speech might turn out to be a key determinant of the pair's near-term trajectory. 

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Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, "yesterday’s failure at 109.83 and a drop to 108.85 today has poured cold water over expectations that the spot may have bottomed out and could target double bottom neckline level of 110.95. However, all is not lost. An end of the day close above 109.62 [trend line hurdle] would open up upside towards 110.95. The 14-day RSI carries higher lows formation, which suggests potential for an upside move. On the downside, an end of the day close below 109.00 would open doors for a sell-off to 108.13 ahead of Yellen speech."