USD/JPY: rallies towards 109.80 to recover over 130% risk-off losses

Currently, USD/JPY is trading at 109.57, up 0.29% on the day, having posted a daily high at 109.69 and low at 108.27.

USD/JPY has taken off, with a recovery in stocks as the threats of WW3 subside in the minds of traders and investors. "Geopolitical anxiety tends to be intense but short-lived," explained analysts at Brown Brothers Harriman, "In the medium and longer-term, the dollar-yen needs higher US interest rates to find better traction," explained analysts at Brown Brothers Harriman, "In the medium and longer-term, the dollar-yen needs higher US interest rates to find better traction."

USD/JPY highly correlated to S&P 500 and the Dow Jones - BBH

Meanwhile, the benchmark US ten-year yields have been rising off the risk-off lows down at 2.0841% and are currently trading at 2.1362% at the time of writing, still down -0.97% on the session though vs 2.1571% closing level. All eyes will now be turning back to data this week and the key nonfarm payrolls numbers are on Friday US session. With no signals from last week's Jackson Hole speech from Yellen in respect to monetary policy, this week's jobs data will be heavily scrutinized ahead of September's announcements from the FOMC meeting in respect to the balance sheet. 

"Wage growth to disappoint - but only because of a statistical quirk..." argued analysts at ING Bank, adding, "a surge in wage growth during July was a welcome development after a particularly lackluster start to the year."

USD/JPY levels

From a technical point of view, Valeria Bednarik, chief analyst at FXStreet explained in the 4 hours chart, it shows that the price remains below its 100 and 200 SMAs, while technical indicators have bounced sharply from nearly oversold readings and are currently pressuring their mid-lines, supporting further short-term gains ahead of a break above 109.70/80 regions, the immediate resistance. "Further gains beyond 110.10, should open doors for a steeper advance towards 110.50." However, to the downside, failure at the 108.13 April low would put the July 2016 high at 107.49 on the map.