USD/JPY retreats from multi-month highs, still well bid above 117.00 handle

The USD/JPY pair extended overnight strong gains, led by hawkish Fed statement, and jumped to its highest level since Feb. 4. The pair moved within striking distance of 118.00 handle but struggled to build on to the momentum and has now retraced over 40-pips from session peak.

Currently trading around 117.40 level, the pair on Wednesday surged through 117.00 handle after the Fed announced first interest-rate hike in 2016 and hinted towards a faster pace of rate-increases in 2017, than previously anticipated. The pair, however, faced some resistance at higher level as expected tighter Fed monetary policy stance trigger a fresh wave of risk-off mood and is supporting the Japanese Yen's safe-haven appeal. 

With policymakers expecting inflation to rise back to 2% "over medium term", investors on Thursday turn their focus to the US CPI print, scheduled for release later during NA session, ahead of next week's another big event risk, BOJ monetary policy decision. 

Technical levels to watch

From current level, 117.30 area is likely to act as immediate support below which the pair is likely to head back towards session low support near 117.00 handle. A follow through selling pressure below 117.00 mark is likely to trigger a corrective slide towards previous multi-month swing highs, turned support, near 116.15-10 region.

Meanwhile on the upside, momentum above session peak resistance near 117.85 level now seems to lift the pair beyond 118.00 handle towards its next resistance near 118.25 (Feb. 4 high).