USD/JPY keeps the red, just below 111.00 handle
• Reviving safe-haven demand capped the post-NFP strong up-move.
• JPY further underpinned by an upward revision of Japanese GDP print.
• September Fed rate hike prospects limit further downside, at least for now.
The USD/JPY pair met with some fresh supply at the start of a new trading week and eroded part of Friday's goodish recovery gains from over two-week low.
After an initial fall on Friday, the pair caught some fresh bids and recovered nearly 85-pips from an intraday low level of 110.38. Resurgent US Dollar demand, supported by the latest US monthly jobs report, was seen as one of the key factors driving the pair higher.
The up-move, however, remained capped after the US President Donald Trump threatened to impose tariffs on additional $267 billion Chinese products, over and above the already promised duties on $200 billion worth of Chinese imports.
Escalating trade tensions kept benefitting the Japanese Yen's safe-haven appeal and exerted some fresh downward pressure during the Asian session on Monday. The Japanese Yen was further supported by an upward revision of the domestic growth figures, showing that the economy expanded by 3% annualized rate in the second-quarter of 2018, marking the fastest pace since 2016.
The downtick, so far, has been limited amid firming expectations for September Fed rate hike action, reinforced by Friday's upbeat average earnings growth data from the US, and some signs of stability in equity markets.
It would now be interesting to see if the pair is able to attract any fresh buying interest at lower levels or bearish traders manage to decisively break through 100-day SMA support amid absent relevant market moving economic releases from the US.
Technical levels to watch
Any meaningful slide might continue to find support near mid-110.00s (100-DMA), below which the downfall could get extended towards the very important 200-day SMA support near the 109.80 region.
On the upside, the 111.10-15 region now seems to act as an immediate hurdle, which if cleared could lift the pair back towards the 111.50-55 intermediate resistance ahead of 111.80-85 supply zone.