USD/JPY hits fresh 8-week tops, inching closer to 112.00 mark

The Japanese Yen continued losing ground against the greenback, now pushing the USD/JPY pair closer to the 112.00 handle and fresh 8-week tops.

The pair built on Friday's sharp recovery move from the vicinity of mid-109.00s and was being supported by fading safe-haven demand on abating concerns over North Korea. 

With no new aggressions over the weekend, easing geopolitical tensions remains supportive of improving investors' appetite for riskier assets and dented the Japanese Yen's safe-haven appeal.

   •  Wall Street extends gains, closes at fresh record highs

Besides the latest risk-on environment, reports that Japan's PM Shinzo Abe might call a snap election as early as next month was also seen weighing on the Japanese Yen and further collaborated to the pair's strong up-move to its highest level since July 27.

   •  Sources: Japan's Abe to pledge something for all generations in snap election - RTRS

It, however, remains to be seen if the pair is able to extend the ongoing bullish trajectory amid some repositioning trade ahead of the much awaited FOMC rate decision on Wednesday. 

Apart from the political developments in Japan and Fed meeting, the BoJ announcement on Thursday would also play a major role in determining the pair's next leg of directional move. 

Technical levels to watch

Momentum above the 112.00 mark could get extended towards the very important 200-day SMA hurdle near the 112.25 region. A follow through buying interest has the potential to continue lifting the pair towards reclaiming the 113.00 handle with some intermediate resistance near the 112.50-60 region.

On the flip side, retracement back below mid-111.00s, leading to a subsequent break below 111.35 level (session low), now seems to drag the pair below the 111.00 handle towards its next support near the 110.85-80 region.