USD/JPY consolidating recent gains to multi-month high

After an initial downtick to session through level near 108.80 region, the USD/JPY pair managed to recover its lost ground and has now moved back above 109.00 handle.

Currently trading 109.15-20 band, nearly unchanged from yesterday's closing level, the pair has now moved within striking distance of Tuesday's multi-month high level near 109.35 region. Improving investor risk appetite, as depicted by a rise in Tokyo's Nikkei 225 to its highest level since February, is further denting the Japanese Yen's safe-haven appeal and providing an additional boost to the major. 

Later during NA session, second-tier US manufacturing data - Industrial Production and Capacity Utilization Rate, would be looked upon for short-term trading opportunities. Meanwhile, the broader trend would remain dependent on market expectations of an eventual Fed rate-hike action, which currently is pricing-in over 90% 90% chances of a rate-hike at the next FOMC monetary policy meeting on December 13-14.

From technical perspective, the pair has already moved into near-term overbought conditions and hence, warrants a near-term consolidation or a corrective move before the next leg of appreciating move.

Technical levels to watch

Momentum above 109.34 (yesterday's high) is likely to get extended towards 109.59 (June 2 high) before the pair darts towards 110.00 psychological mark. On the downside, sustained weakness below 108.80 (session low) might trigger a corrective slide towards 108.00 handle with 108.50 area acting as intermediate support.