The USD/JPY pair traded with mild positive bias for the second straight session on Thursday but continued with its struggle to decisively break through weekly trading range.
Currently hovering around the 109.00 handle, the pair extended its consolidative price-action around the very important 200-day SMA and lacked any firm near-term direction amid subdued US Dollar price-action. With markets heading into the big event risk, the crucial French Presidential elections on Sunday, market anxiety continues to support the Japanese Yen's safe-haven appeal and has been limiting the pair's recovery move from 5-month lows.
Meanwhile, a mildly positive trading sentiment in Asian equity markets, coupled with modest gains for the US treasury bond yields, has helped the pair to hold in positive territory, at least for the time being.
• Asian stocks rally, but gains tempered by losses in oil
Today's US economic docket features the release of usual weekly jobless claims and Philly Fed Manufacturing Index and would be looked upon for short-term trading impetus. Investors', however, would keenly scrutinize comments from the US Treasury Secretary Steven Mnuchin as any comments over the US currency should lead to a fresh bout of volatility.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet writes, "pair’s higher low formation (Monday - 108.13, Tuesday - 108.32, Wednesday - 108.37) coupled with an oversold RSI suggests the sell-off from the March 31 high of 112.20 may have run out of steam. However, only a break above the inverse head and shoulders neckline (on 4-hour chart) would add credence to the higher low formation and breach of the falling trend line on the daily RSI and open doors for a rally to the resistance offered by the descending trend line (seen on the daily chart) around 109.75-110.00 levels."
"Watch out: Repeated failure at the inverse head and shoulders neckline followed by a bearish breakdown of the falling channel would signal the continuation of the sell-off, in which case a major support at 107.49 (July 21 high) could be put to test" he added.
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