USD/JPY refreshes session lows on latest N. Korean headlines

The USD/JPY pair stalled its modest recovery move just ahead of the key 110.00 psychological mark and tumbled to fresh session lows, below mid-109.00s.

The pair's rapid slide of around 40-pips over the past hour could be attributed to news headlines, via South Korea’s state news agency, Yonhap, that the South Korean officials detected N. Korea missile launch preparation, possibly for another intercontinental ballistic missile (ICBM).

   •  S. Korea: N. Korea possibly preparing for ICBM launch - Yonhap

Escalating geopolitical tensions remained supportive for the Japanese Yen's safe-haven appeal and has been one of the key factors weighing on the major.

The pair, however, has managed to rebound around 15-pips from session lows and was being supported by a modest uptick in the US Treasury bond yields. With investors looking past Friday's weaker US monthly jobs report, growing conviction that the Fed would eventually start unwinding its massive $4.5 trillion balance sheet in September. This coupled with slim chances of possible additional Fed rate hike action in 2017 helped limit further losses at least for the time being.

Technical levels to watch

Immediate support is pegged near 109.30-25 area, below which the pair is likely to break through the 109.00 handle and aim towards testing its next support near the 108.65-60 region. 

On the upside, any recovery attempts might continue to confront some fresh supply near the 110.00 handle, which if cleared might trigger a short-covering bounce back towards mid-110.00s en-route 110.75-80 strong horizontal resistance.