USD/JPY extends upward trajectory, hits fresh session high

The USD/JPY pair maintained strong bid tone and extending the momentum further beyond, has now risen to a fresh session high level of 104.25.

Positive opening in the European equity markets added to the buoyant sentiment led by upbeat Chinese inflation data and is driving investors away from the perceived safety of the Japanese Yen. 

Meanwhile, the greenback continues to gain traction as market seem convinced that the Fed would eventually move towards raising interest rates by the end of this year and helped the pair to resume its near-term bullish trajectory following Thursday's corrective dip to 100-day SMA resistance break, now turned strong support. The CME group's FedWatch Tool is currently pricing-in 60% probability of a Fed move in December.

Going forward, today's US macro releases that include - monthly retail sales, PPI and Prelim UoM Consumer Sentiment, and speeches from Federal Reserve Bank of Boston President Eric Rosengren and Fed Chair Janet Yellen would drive the pair during US trading session. In the meantime, the prevalent risk-on sentiment might continue to drive the pair higher during European session.

Technical outlook

Mohammed Isah, Technical Strategist at FXTechstrategy, notes, "On the downside, support comes in at the 103.00 level where a break if seen will aim at the 102.50 level. A cut through here will turn focus to the 102.00 level and possibly lower towards the 101.50 level. Its daily RSI is bearish and pointing lower suggesting further weakness. On the upside, resistance resides at the 104.00 level. Further out, we envisage a possible move towards the 104.50 level. Further out, resistance resides at the 105.00 level with a turn above here aiming at the 105.50 level. On the whole, USDJPY looks to pullback further."