USD/JPY retreats from multi-month highs on profit-taking

The USD bulls took a breather, with the USD/JPY pair trimming part of its strong gains to fresh multi-month highs. 

Currently hovering around 113.00 handle, the pair has retreated over 50-pips from mid-113.00s touched during early European session. Wednesday's strong up-move, led by upbeat US durable goods orders, further supported by hawkish Fed minutes, added on to the pair's post-US presidential election rally of over 1000-pips. Hence, today's retracement could be attributed to some profit taking amid holiday thinned liquidity conditions. 

Meanwhile, a mild retracement in European equity markets, from earlier strong gains, is supporting the Japanese Yen's safe-haven appeal and might be another reason contributing to the pair's retracement from multi-month highs. 

Technical outlook

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., notes, "Fresh bulls eye next target at 114.28 (Fibo 61.8% of larger 123.74/98.98 fall), close above which will add on firm bullish stance, as the pair is on track for the third straight strong bullish weekly close. Scenario of extension towards weekly cloud top is also in play, as daily indicators continue to head north, despite being deeply in the overbought territory. Dips are seen as buying opportunities, with session low at 112.36 offering initial support ahead of daily cloud base at 111.60 which should contain extended dips."

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