USD/JPY is gaining bullish traction for the second consecutive session on Thursday, extending the recovery from multi-month lows registered below 107.00 last week. The yen’s safe haven appeal turned sour amid optimism over the widely expected trade talks between the U.S. and China this weekend.
The greenback regained positive momentum ahead of the final U.S. Q1 report due later today. Traders hope that the data will come on the strong side and thus will reduce the possibility of a rate hike by the Federal Reserve. The additional downside pressure on the yen came from the Bank of Japan as Wakatabe said the central bank won’t hesitate to add stimulus if momentum towards price goal is lost.
In a wider picture, however, USD/JPY remains under pressure and could resume the downside move should risk aversion resume in the short term. Technically, the pair needs to have a clear break above the 108.15 resistance in order to target 108.30 and then 108.50. On the downside, the immediate support comes as 107.60.