USD/JPY: Recovery capped at 108.80, risk-off, dovish Fedspeaks weigh

The bears regained poise over the last hour, stalling the recovery attempted by USD/JPY from five-day lows of 108.52.

USD/JPY: Eyes on 4-month lows of 108.27?

The spot continues to face double whammy and remains depressed just above the midpoint of 108 handle, as the ongoing tensions surrounding the North Korean missile launch keep the safe-haven Yen broadly boosted on one hand. While downbeat US macro news combined with Fed official’s cautious tone on the interest rates weighed heavily on the US rates, dragging the greenback sharply lower against its Japanese counterpart.

Moreover, the Japanese yen ignored the BOJ resorting to more JGB buying today, while the latest reports of the Japanese companies cut bonuses and pushing overall wages lower, also had little impact on the domestic currency.

Later today, the major will continue to get influenced by the USD dynamics and risk trends ahead of the US ISM non-manufacturing PMI and Beige book due on the cards in the NA session.

USD/JPY Technical levels                 

To the topside, a daily close above 109 (round number) would shift risk in favor of a re-test of 109.42/55/56 (5, 10 & 20-DMA) beyond which 110.27 (classic R2/ Fib R3) would be back on sight. A break below 108.27 (4-month low) would open doors for 108 (zero figure). A break lower would yield a test of 107.50 (Nov 2016 levels).