USD/JPY retreats further from 5-week tops, at low point of the day

Haresh Menghani FXStreet

• The post-FOMC USD up-move fails to assist build on overnight strong up-move.
• Risk-off mood underpins JPY’s safe-haven demand and exerts downward pressure.

The USD/JPY pair traded with a mild negative bias through the Asian session on Friday and eroded a part of previous session strong up-move to five-week tops.

Resurgent US Dollar demand on Thursday helped the pair to build on the previous session's goodish rebound from sub-113.00 level, touched in the aftermath of the US midterm election results that showed a split Congress in the US.

The positive momentum accelerated further, lifting the pair to levels just above the 114.00 handle after the Fed maintained its hawkish stance with an upbeat assessment of the economy and reiterated its commitment to continue raising interest rates gradually in the future.

The post-FOMC USD up-move extended through early trading hours on Friday, albeit failed to provide any fresh bullish impetus. A softer tone around equity markets underpinned the Japanese Yen's safe-haven status and turned out to be one of the key factors keeping a lid on any further up-move.

A slight deterioration in investors' appetite for riskier assets was evident from a softer tone around the US Treasury bond yields, which further collaborated to the pair's ongoing retracement slide to fresh intraday lows, around the 113.85-80 region.

With the only scheduled release of the preliminary Michigan Consumer Sentiment Index for November, today's economic docket lacks any major market-moving economic data. Hence, the broader market risk sentiment might continue to act as an exclusive driver of the pair's momentum on the last trading day of the week.

Technical levels to watch

Any subsequent slide is likely to find support near the 113.70-65 region and is followed by the 113.45-40 region, below which the downfall could further get extended towards the 113.10-113.00 support area. On the flip side, the 114.00-114.05 region now seems to have emerged as an immediate resistance, which if cleared could accelerate the up-move further towards the 114.50-55 supply zone.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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