USD/JPY bounces off lows, hovering over 109.70

The Japanese Yen is giving away some of its earlier gains vs. the buck at the beginning of the week, with USD/JPY coming up from as low as the 109.40 area to the current 109.70/75 band.

USD/JPY weaker on NK headlines

Spot opened the day with a gap lower following heightened geopolitical risks and logical safe haven demand in response to a nuke test by North Korea.

Furthermore, demand for safer assets stay firm so far, bolstered by further news regarding the likeliness of another ICBM launch by North Korea in the very near term horizon.

The pair, in the meantime, seems to have found some contention in the 109.40/30 band, keeping the trade well within the broad range prevailing since last March, with extremes in the 108.00 area and the upper bound around 115.00.

Ahead in the week, Japanese Q2 GDP figures will be the salient event, while the ISM non-manufacturing and Fedspeak should also keep the attention around the buck.

On the positioning front, JPY speculative net shorts receded to the lowest level since late June during the week ended on August 29 in light of the latest CFTC report.

USD/JPY levels to consider

As of writing the pair is losing 0.49% at 109.72 and a breakdown of 109.38 (low Sep.4) would expose 108.27 (low Aug.29) and finally 108.11 (low Apr.14). On the other hand, the immediate up barrier emerges at 110.42 (high Sep.1) seconded by 110.67 (high Aug.31) and then 110.95 (high Aug.16).