USD/JPY consolidates in a range, comfortably above 109.00 handle

The USD/JPY pair seesawed between tepid gains/minor losses through the Asian session on Friday and is currently placed in the neutral territory, around the 109.25 region.
 
The pair on Thursday witnessed a dramatic intraday turnaround and rallied over 90 pips from daily lows amid signs of progress in resolving a 16-month long trade war between the world's two largest economies. Officials said on Thursday that both China and the United States have agreed to roll back tariffs in a "phase one" trade deal if it is completed.

Focus remains on trade

The headlines triggered a fresh wave of global risk-on trade and weighed heavily on the Japanese Yen's perceived safe-haven status. The risk-on mood further led to a strong upsurge in the US Treasury bond yields, which helped revive the US Dollar demand and remained supportive of the pair's strong positive momentum to the highest level since late-May.
 
However, conflicting reports, suggesting that the subject of rolling back tariffs faced fierce internal opposition in the White House, raised some scepticism about a trade deal and kept a lid on any strong follow-through. Adding to this, White House adviser Peter Navarro said that there is no agreement at this time to remove any of the existing tariffs.
 
Subsequent developments led to a slightly softer tone on the last trading day of the week and turned out to be one of the key factors exerting some downward pressure on the major. Meanwhile, the pullback remained limited, at least for the time being, as investors awaited fresh trade developments before placing any aggressive directional bets.

Technical levels to watch