• Easing USD bearish pressure helps defend 100-DMA support.
• Bulls seemed rather unaffected by the prevalent risk-off mood.
• Investors look forward to the FOMC minutes for fresh impetus.
Having retested 100-day SMA support, the USD/JPY pair turned higher for the second straight session and is now looking to retest overnight swing high.
Reports that the US President Donald Trump’s longtime lawyer Michael Cohen was admitted for making illegal payments and committed other crimes to influence the 2016 election exerted some downward pressure initially. However, a modest US Dollar rebound, following the recent sell-off triggered by Trump's critical comments on the Fed's policy tightening, extended some support and helped the pair to bounce off lows.
The uptick seemed largely unaffected by a slight deterioration in investors' risk-appetite, as depicted by weaker opening across European equity markets and which tends to underpin the Japanese Yen's safe-haven appeal. The risk-off mood was further reinforced by sliding US Treasury bond yields, albeit did little to prompt any fresh selling, with the USD price dynamics turning out to be an exclusive driver of the pair's up-move of around 40-50 pips from the key 110.00 psychological mark.
Moving ahead, today's key focus would remain on the release of the latest FOMC meeting minutes, wherein the Fed is widely expected to reaffirm the optimistic economic outlook and reinforce a September rate hike move, which might eventually provide some immediate respite for the USD bulls.
Technical levels to watch
On a sustained move beyond the 110.50-55 region, the pair is likely to aim towards reclaiming the 111.00 handle before darting towards 111.15-20 supply zone. On the flip side, the 110.00 handle might continue to act as an immediate support, which if broken might turn the pair vulnerable to aim towards testing 109.40-35 support area.
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