USD/JPY trims gains, back around 117.00

After testing daily highs in the mid-117.00s, USD/JPY has scaled back those gains and returned to the 117.00 neighbourhood for the time being.

USD/JPY attention to data

The pair is holding on to the upper end of the recent range around the 117.00 handle, following a better tone in the greenback after Friday’s results from US Non-farm Payrolls.

In the meantime, the pair seems to have found some decent support in the vicinity of the 115.00 mark, as seen by the strong rebound from last week’s lows, while the performance of US yields - particularly the 10-year benchmark – continue to be the main driver behind the price action.

Data wise today, the Fed’s Labor Market Conditions Index is next on tap ahead of speeches by Atlanta Fed Dennis Lockhart (centrist, non voter) and Chicago Fed Charles Evans (voter, dovish). Later in the week, US Retail Sales and advanced Consumer Sentiment will take centre stage along with expected Fedspeak.

JPY remains under pressure on the positioning front as well, with speculative net shorts staying almost unchanged around 86K contracts on the week to January 3 and according to the latest CFTC report.

USD/JPY levels to consider

As of writing the pair is retreating 0.05% at 116.96 facing the next support at 116.02 (low Dec.30) followed by 115.04 (low Jan.6) and finally 114.54 (23.6% Fibo of the November-December up move). On the other hand, a break above 117.53 (high Jan.9) would aim for 118.67 (high Dec.15) and then 121.70 (2016 high Jan.21).