USD/JPY fails ahead of 110.00 handle, surrenders early recovery gains
• Stalls overnight sharp recovery move led by Trump’s remarks.
• BOJ meeting minutes further contribute towards capping gains.
• Important US macro data eyed for near-term directional impetus.
The USD/JPY pair struggled to build on overnight sharp recovery move from over 4-month lows and failed ahead of the 110.00 handle.
Overnight remarks by the US President Donald Trump, saying that he wanted a stronger US Dollar helped the pair to stall its recent bearish slide and stage a goodish rebound from the lowest level since Sep. 11.
The recovery extended through the early Asian session on Friday and lifted the pair to an intraday high level of 109.77, over 125-pips higher from previous session's swing lows near mid-108.00s.
The momentum lost steam following the release of latest BOJ monetary policy meeting minutes, which revealed that some board members said the central bank should consider raising interest rates or slow down purchases of risky assets if the economic recovery continues.
The downside, however, remained limited as most of the nine-member board agreed it was appropriate that the central bank maintains the current powerful monetary easing as inflation was still distant from reaching its 2% target.
The pair as now reversed all of its early gains and is currently placed at the lower end of its daily trading range. Traders would continue to monitor any fresh comments coming out of the World Economic Forum, while today's key US macro releases - advance GDP growth figures and durable goods orders, would also play an important role in driving the pair in the near-term.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes: “Technical readings in the 4 hours chart, however, support a continued slide ahead, as the price continues moving away from bearish 100 and 200 SMAs, while technical indicators stand in extreme oversold territory, with the RSI heading south at 21. The pair could correct higher on an advance above the 108.80/90 price zone, the immediate resistance, while a steady decline will likely expose 2017 low of 107.31.”