USD/JPY building on momentum back above 104.00 handle

Following Thursday's corrective move to retest 100-day SMA resistance break-point turned support, the USD/JPY pair resumed with its near-term bullish momentum and has now moved back above 104.00 handle. 

Currently trading around 104.10 region, the pair reversed majority of the losses recorded in the previous session led by disappointing Chinese trade data, which triggered a wave of global risk-aversion and boosted safe-haven appeal of the Japanese Yen. 

Investor risk-appetite on Friday improved on Friday after Chinese CPI for the month of September rose faster-than-expected and rose to a four-month high. CPI print came-in at 1.9% y-o-y as against 1.6% expected and 1.3% recorded in the previous month. Meanwhile, surprisingly positive producer inflation, for the first time since early 2012, raised optimism over the economic outlook and boosted investor confidence. 

On Friday, US macro releases that include - monthly retail sales, PPI and Prelim UoM Consumer Sentiment, will provide impetus for traders. Meanwhile, speeches from Federal Reserve Bank of Boston President Eric Rosengren and Fed Chair Janet Yellen might provide fresh clues over the timing of next Fed rate-hike action and assist investors to determine the next leg of directional move.

Technical levels to watch

Momentum above 104.20 level seems to boost the pair immediately towards 104.50-60 multi-week highs resistance above which the pair seems all set to aim towards reclaiming 105.00 psychological mark. On the downside, 103.70 level now becomes immediate support, which if broken seems to drag the pair back towards 100-day SMA support near 103.30 region.