USD/JPY remains under pressure, heads for a daily close below 110

The USD/JPY pair gained traction during the first half of the NA session and recovered the majority of its daily losses but failed to hold above the 110 handle. As of writing, the pair was trading at 109.80, losing 0.47% on the day.

The fact that the US Dollar Index struggled to preserve its data-led gains in the session capped the USD/JPY pair's earnings. Today's data from the U.S. revealed that the nonfarm productivity in the second quarter of 2017 increased by 0.9%, surpassing the market expectation of 0.1% while the unit labor costs rose by 0.6% after recording a 5.4% (revised from 2.2%) growth in the first quarter. At the moment, the index, which jumped to a weekly high at 93.77, is at 93.43, losing 0.05% on the day. 

Earlier in the day, the pair plummeted to its lowest level since June 15 at 109.55 as the rising geopolitical tension surrounding North Korea increased the demand for traditional safe havens like the JPY. In a recent report, "despite Japan being a likely target of freshly erupting North Korean ire, traders still see the yen as a safe-haven play, and they're pushing the currency higher," CNBC said. Although the second half of the day didn't produce any fresh headlines on that subject, investors remain on the edge, ready to seek refuge.

• USD/JPY: risk remain centred on geopolitical risk - Scotiabank

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "...in the 4 hours chart, the price is well below a bearish 100 SMA, whilst the Momentum indicator keeps heading south within oversold territory, as the RSI indicator consolidates around 40. Further declines should be expected on a break below 109.50, with the market then targeting 108.80, June's monthly low."

According to the analyst, supports could be seen at 109.50, 109.20 and 108.80 while resistances align at 110.15, 110.40, and 110.70.

• USD/JPY: not yet oversold - Scotiabank