The USD/JPY pair took a U-turn in Asia and fell further towards 109 handle, as the yen bulls regained control following the release of solid Japan’s manufacturing PMI data, which showed that the gauge hit the highest levels in two-months.
Moreover, the latest leg down in the USD/JPY pair is also on the back of stalled USD rally across the board. The US dollar took a pause in its overnight rally and entered a phase of consolidation against its main peers, as markets remain wary over the US treasury secretary Mnuchin’s comments delivered in the US last session.
However, it remains to be seen if the bears can extend control below 109 levels, as risk-on rally in the Asian equities combined with stable oil prices keep the sentiment around the major somewhat buoyed.
All eyes now remain on the manufacturing and services PMI reports from the US and Fedspeaks, as investors remain on the back ahead of the French Presidential elections due to be held this Sunday.
USD/JPY Technical levels
A break above 109.39/49 (daily high/ Apr 20 high) would expose 110/110.02 (zero figure/ 20-DMA) and 110.17/ 50 (200-DMA/ psychological levels). On the other hand, a breach of support at 109 (round number) could yield a test of 108.86/85 (Classic S1/ Fib S1) and 108.35/29 (Apr 19 & 18 low).