USD/JPY hits fresh session low amid cautious trade

The USD/JPY pair extended its reversal from session peak level of 104.20 and has now dropped to a fresh session low amid prevalent risk-off mood.

Currently trading around 103.70-65 region, the pair reversed part of Thursday's strong gain and once again failed to sustain its strength above 104.00 handle. Friday's news of a powerful earthquake hitting western Japan triggered the initial leg of slide for the pair. 

Moreover, the pair seems to have shrugged-off Thursday's hawkish comments from Federal Reserve New York President William Dudley as persistent weakness in European equity markets is benefitting the Japanese Yen's safe-haven appeal and exerting selling pressure around the major.

In absence of any market-moving economic releases from the US, broader market risk sentiment would continue to drive the pair during US trading session on the final day of the current week.

Technical outlook

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., notes, "The pair eases from highs at 104.09/18, posted on Thursday/today, on fresh bullish acceleration above daily cloud. The action revived near-term bulls which were sidelined on past two-day probes below cloud top at 103.50. Daily cloud continues to underpin near-term action, with dips from 104.18 high, expected to find support at 103.50/32 zone (daily cloud top / yesterday’s low), before renewed attempts above 104.00 zone, which marks significant resistance."

"Conversely, extended dips below 103.15 (Wednesday’s low) will sideline bulls, while break below 120.33/20 (daily Kijun-sen / cloud base) will be bearish."