USD/JPY fails to resist above 109 handle

USD/JPY is seen moving back and forth around 109 handle, as the rate lacks direction amid mixed markets and a lack of fresh fundamental drivers.

USD/JPY supported above 5-DMA at 108.51

The dollar-yen pair fails to sustain the renewed uptick above 109 handle and now hovers near the last, awaiting fresh impetus from the upcoming US economic releases and Fed speaks due later in the American session. Markets eagerly await the US CPI, housing and Philly Fed manufacturing index, while apart from the data, Yellen’s testimony will be key, in order to gauge the Fed rate hike prospects for Dec.

Industry analysts now believe that, despite odds for a Dec rate hike stands almost 100%, a surprise Fed inaction cannot be ruled out in Dec, as the FOMC may want to sit back and watch the impact of Trump’s fiscal policies, as he is expected to take charge of the office from Jan next year.

Meanwhile, markets digest latest BOJ headlines that cited the bank offers to buy unlimited amounts of JGBs 1-3 year maturity, which triggered a spike in the USD/JPY pair to 109.26 highs, before receding back just below 109 handle.

USD/JPY Technical levels to watch 

In terms of technicals , the immediate resistance is located at 109.26 (daily high). A break above the last, the major could test 109.50 (zero figure) and 109.77 (multi-month high) beyond the last. While to the downside, the immediate support is seen at 108.63 (daily S1) next at 108.49 (5-DMA) and below that at 107.74 (Nov 15 low).

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