Following yesterday's volatile swing, the USD/JPY pair came under some renewed selling pressure on Friday and was seen flirting with the 111.00 handle.
Earlier on Thursday, the pair extended post-FOMC retracement from weekly tops near the 112.20 region and dropped back closer to one-month lows around 110.80 area. As the day progressed, the pair staged a goodish recovery and touched a session high level of 111.71, supported by broad based greenback recovery.
With the US Dollar recovery move losing steam just ahead of the 94.00 handle, a fresh wave of global risk aversion trade boosted the Japanese Yen's safe-haven appeal and was seen weighing on the major.
The Japanese Yen also benefitted from today's better-than-expected release of household spending, Tokyo Core CPI and a drop in unemployment rate. Also collaborating to the Yen's strength was the Bank of Japan (BOJ) summary of opinions from the July meeting concluded last week, which revealed that policymakers don't foresee the need for any additional monetary easing as the upward momentum in prices remains intact.
Further downside has been limited, at least for the time being, as investors seemed reluctant to place aggressive bets ahead of today's release of the advance US growth figures for the second quarter of 2017, due later during the NA session.
• US: GDP back on trend? - ING
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes: "Following the confirmation of the bullish reversal on Tuesday, the upticks have been met with fresh offers. Thus, one may vouch for a sell-off to 110.00 levels, however; it is worth noting that Monday’s Doji candle low of 110.62 has remained unchallenged… Dips below 110.98 (61.8% Fib) have been short lived this week. Thus, it is safe to assume the bears stand exhausted and the spot is on track to revisit the upward sloping 200-DMA level of 112.01."
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