USD/JPY recovers early lost ground to 107.00 handle, NFP and Powell in focus

   •  Trump’s order to consider new tariffs on China led to the initial weakness.
   •  Ahead of the key NFP report/Powell’s speech, dip buying helps bounce off lows.

The USD/JPY pair reversed an early dip to the 107.00 handle and is currently placed at the top end of its Asian session trading range. 

The pair came under some renewed selling pressure during the Asian session on Friday after the US President Donald Trump ordered to consider new tariffs on China. The announcement revived fears of a US-China trade war and triggered a fresh wave of risk-aversion trade, benefitting the Japanese Yen's safe-haven appeal.

Further losses, however, remained limited as investors now seemed to refrain from placing aggressive bets and preferred to stay on the sidelines ahead of the key event risk - the release of official US monthly jobs report.

The keenly watched NFP data is known to infuse volatility across global financial markets and would influence the pair's momentum during the early NA session. Apart from this, the Fed Chair Jerome Powell's scheduled speech might influence Fed rate hike expectations and might further contribute towards determining the pair's next leg of directional move. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes, “the pair looks set to test 107.91 (Feb. 21 high) today and could possibly break higher towards 109.00-109.37 in the next few days.”

“On the downside, only a daily close below the neckline support (former resistance) would abort the immediate bullish outlook. That said, only a daily close below 105.66 (April 2 low) would violate the higher lows pattern and allow a re-test of the recent low of 104.63,” he adds further.