USD/JPY recovers to move back above 50-DMA, shy of 110.00 handle

The USD/JPY pair managed to recover from early Asian session drop to 109.42 but still continues to trade in negative territory, just shy of 110.00 handle as investors await US data for further trading cues.

Earlier on Thursday, the pair dropped sharply after Masatsugu Asakawa, vice-minister of finance for international affairs negated the possibilities of an immediate intervention to stop further appreciation of the domestic currency. The pair, however, managed to recover from lows on global risk-on rally witnessed across European equity markets.

Moreover, the pair has now moved back above 50-day SMA region, indicating the possibilities of a further up-move once the 110.00 is reclaimed decisively.

Technical outlook

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd. notes, "The pair recovered part of overnight’s losses that found footstep at 109.40 (Fibo 23.6% of 105.53/110.57 rally), on bounce that returned into daily cloud. Yesterday’s close above cloud’s base generated bullish signal, with bullishly aligned daily technicals, being supportive for renewed attempts at near-term congestion tops at 110.43/57. Sustained break here is needed to signal resumption of recovery leg from 105.53 and expose key short-term barriers at 110.85 (25/28 Apr lower tops)"

"Daily cloud base at 109.72 marks initial support, followed by session low at 109.40 and 109.09 pivot (near-term congestion low, reinforced by 30SMA)."