USD/JPY hits fresh session peak

After an initial dip to mid-108.00s, the USD/JPY pair managed to recover early lost ground and is now building on to its momentum back above 109.00 handle.

Currently trading at fresh session peak near 109.25 level, the pair got an initial boost from the latest BOJ headlines that the central bank offers to buy unlimited amount of JGBs with remaining maturities of 1 to 3 years at a fixed yield of 0.020%. This would be the first action after the new policy framework, targeting longer-term yields, and clearly reflects central bank's concerns over recent surge in global bond yields.

Meanwhile, the greenback continues to find support from market expectations for a December Fed rate-hike, with CME group's FedWatch Tool pricing in over 90% probability of such an action, and has been a key factor limiting any corrective slide for the major. 

Focus now shifts to US macro releases that include - consumer inflation, housing data (building permits and housing starts) and Philly Fed Manufacturing Index, which might further reinforce market expectations and confirm the near-term up-trend of the major. 

Technical levels to watch

From current levels, momentum above 109.50 level is likely to confront resistance near 109.75 (yesterday's high) above which the pair seems all set to reclaim 110.00 psychological mark. On the downside, weakness below 108.80, leading to a subsequent break through session low support near 108.55 level, is likely to extend the corrective slide towards 107.80-75 strong support.